AFC ENTERPRISES: July 13 Balance Sheet Upside-Down by $44.8MM-------------------------------------------------------------AFC Enterprises Inc.'s consolidated balance sheet at July 13, 2008, showed $145.2 million in total assets, and $190.0 million in total liabilities, resulting in a $44.8 million shareholders' deficit.

At July 13, 2008, the company's consolidated balance sheet also showed strained liquidity with $42.9 million in total current assets available to pay $53.2 million in total current liabilities.

Net income was $6.6 million for the fiscal second quarter ended July 13, 2008, compared to $6.6 million last year.

Total system-wide sales increased by 1.5 percent. This increase in system-wide sales was comprised of a 1.4 percent increase in franchisee restaurant sales to $387.4 million (which are not recorded as revenue by the company), and a 3.9 percent increase in company-operated restaurant sales to $18.8 million.

Total domestic same-store sales decreased 1.7 percent compared to a decrease of 2.1 percent last year, and total global same-store sales decreased 1.4 percent compared to a decrease of 1.7 percent last year. Same-store sales performance continues to be impacted by lower transactions as traffic continues to slow due to challenges in the economy and to industry-wide pricing increases to offset rising commodity costs.

Total revenues were $39.3 million, compared to $38.3 million last year. This increase was comprised of approximately $800,000 from new openings of company-operated restaurants in the Atlanta and Tennessee markets, $600,000 from the timing of temporary restaurant closures primarily in New Orleans, and $700,000 primarily from royalties and fees from new franchised restaurants, partially offset by a $900,000 decrease in same-store sales.

Company-operated restaurant expenses for food, beverages and packaging as a percentage of sales were 35 percent compared to 34 percent last year, increasing primarily due to commodity costs for chicken, wheat and shortening. Restaurant employee, occupancy and other expenses as a percentage of sales were 53 percent compared to 51 percent last year, increasing primarily due to utilities and insurance related reserves.

General and administrative expenses were $12.0 million, or 3.0 percent of system-wide sales, compared to $9.5 million, or 2.4 percent of system-wide sales last year. This increase was due primarily to costs of new management talent and non-recurring marketing and menu professional fees.

Other income was $3.8 million, which includes a net favorable settlement of a $12.3 million related to a director and officers insurance claim and an $8.1 million impairment charge associated with the the negotiation of definitive agreements to refranchise and sell company-operated restaurant assets in Atlanta, Georgia and Nashville, Tennessee.

Second quarter year-to-date EBITDA was $29.9 million, including $5.1 million for other non-operating income, at a margin of 32.3 percent of total revenues, compared to last year's EBITDA of $29.4 million, at a margin of 32.9 percent.

Operating profit was $12.9 million, compared to $12.7 million last year.

Income tax expense was $4.4 million, an effective tax rate of 40.0 percent, compared to an effective tax rate of 38.3 percent last year.

Cheryl Bachelder, AFC chief executive officer, stated, "We were pleased with our earnings performance for the second quarter. Our same-store sales continue to be impacted by the current economic environment; however, we believe our marketing and messaging helped us during the quarter as our comparable sales performance continued to outpace the chicken QSR segment. As we move into the second half of this year, we are excited to be rolling-out three new menu platforms designed to generate incremental sales with a focus on portability, value, and lunch occasions."

The company said its second quarter year-to-date free cash flow remains strong at $16.8 million, including $5.1 million for other non-operating income, compared to $15.4 million last year.

The company recorded an additional $2.3 million payment for the final installment related to the company's previously announced accelerated stock repurchase program which was completed on July 7, 2008. Second quarter year-to-date, the company repurchased 2.1 million shares of common stock for $18.9 million. Under the terms of its current credit facility, the company has the ability to repurchase an additional $19.3 million of shares during fiscal year 2008. As of Aug. 8, 2008, there were approximately 25.2 million shares of the company's common stock outstanding.

Effective June 30, 2008, through June 30, 2010, the company entered into an interest rate swap agreement on an amount of $100.0 million. The effect of the agreement is to limit interest rate exposure on this portion of the 2005 Credit Facility to a fixed rate of 4.87 percent, compared to 6.40 percent on the previous interest rate swap agreement.

The Popeyes system opened 32 new restaurants, including 17 units domestically and 15 units internationally, compared to 24 new restaurants last year, and reported 31 permanent restaurant closures.

On a system-wide basis, Popeyes had 1,901 units operating at the end of the second quarter, compared to 1,878 units last year. Total unit count was comprised of 1,576 domestic units and 325 international units in 25 foreign countries and two territories. Of this total, 1,834 were franchised and 67 were company-operated restaurants.

Headquartered in Atlanta, Georgia, AFC Enterprises Inc. (Nasdaq: AFCE) -- http://www.afce.com/-- is the franchisor and operator of Popeyes(R) restaurants. As of July 13, 2008, Popeyes had 1,901 restaurants in the United States, Puerto Rico, Guam and 25 foreign countries.

* * *

As reported in the Troubled Company Reporter on Aug. 4, 2008,Moody's Investors Service assigned a Speculative Grade Liquidityrating of SGL-3 to AFC Enterprises Inc., indicating Moody'sbelief that the company should maintain adequate liquidity overthe upcoming four quarters.

AMERICAN COLOR: Files Supplementary Joint Prepackaged Plan----------------------------------------------------------Vertis Holdings, Inc., and ACG Holdings, Inc., and their debtor-subsidiaries delivered to the U.S. Bankruptcy Court for the District of Delaware, on August 8, 2008, supplements to their Joint Prepackaged Plans of Reorganization.

The Plans contemplate a merger of the Vertis Debtors and the ACG Debtors and a comprehensive financial restructuring of the ACG Debtors' existing equity and debt structures. ACG's Plan also effect, among other things, a significant reduction in the ACG Debtors' outstanding indebtedness, primarily through the exchange of the ACG Second Lien Notes for equity and debt in the merged enterprise. The Plans and their accompanying disclosure statement were originally filed on July 15, 2008. Vertis and ACG are co-proponents under the Plan.

The Plan Supplements consist of:

(1) General Electric Capital Corporation's Exit Commitment Letter for a $250,000,000 senior secured revolving credit facility to be extended to Vertis, a full-text copy of which is available for free at:

(4) The term sheet of the Exit Term Facility, under which (i) $250,000,000 will be available under the first-out term loan tranche, and (ii) $150,000,000 will be made available under the last-out term loan tranche.

A full-text copy of the Exit Loan Term Sheet is available for free at:

(5) An Indenture Agreement for the issuance of 13.5% Senior PIK Notes due 2014 to be executed by Vertis and HSBC Bank USA, National Association, as trustee. Under the Indenture, Vertis covenants to pay the principal and interest on the initial and additional notes, treated as a single class of securities, at the rate of 13.5% per annum, payable semi- annually in arrears. Interest will be paid in-kind through the issuance of Additional Notes.

Pursuant to the Indenture, Vertis will not be required to pay or discharge any tax, assessments, charge or claims with validity that is being contested in good faith by appropriate negotiations, and for which disputed amounts adequate reserves have been made in accordance with generally accepted accounting principles.

A full-text copy of the 13.5% Senior Notes Indenture is available for free at:

(6) An Indenture Agreement for the issuance of 16% Senior Secured Second Lien Notes due 2012 to be executed by Vertis and Wilmington Trust Company, as trustee.

The Second Lien Notes may be redeemed at certain redemption prices expressed as percentages of principal amount of the Notes to be redeemed, during the twelve-month period commencing on the date of issue and each anniversary date:

(7) A copy of Vertis' Stockholders' Agreement, pursuant to which the Company agree to issue (i) shares of its common stock, par value $0.001 per share to Vertis' and ACG's creditors; (ii) restructuring warrants to Vertis' creditors, and (iii) equity incentive shares to certain employees of Vertis and ACG.

Under the Stockholders Agreement, no stockholder is to transfer its shares to another absent the delivery of a written offer to Avenue Investments, LP and its affiliates. The Written Offer should specify the amounts and portions of Shares to be transferred, the proposed sale price and other material terms of the Proposed Transfer.

A full-text copy of Vertis' Stockholders' Agreement is available for free at:

(8) The Warrant Agreement between Vertis and HSBC, as Warrant agent. Under the Warrant Agreement, Vertis agree to issue warrants, which are exercisable to purchase up to 1,299,435 shares of the company's common stock, par value $0.001 per share. Warrant certificates will be executed on behalf of Vertis by its chairman, vice chairman, president, vice president, general counsel, treasurer or secretary.

(9) Vertis' Equity Incentive Plan that provides for the issuance of (i) 1,111,111 shares of Vertis Common Stock in the aggregate, and (ii) up to 1,299,435 Shares under the New Warrants. Awards are open to all employees, officers and directors of the Company under the Incentive Plan, a copy of which is available for free at:

(10) Vertis, Inc.'s 2008 Cash Bonus Plan, which recognizes key employees' support of the company business during its restructuring and integration process. The Cash Bonus Plan provides for an aggregate bonus pool not to exceed $3,000,000 for allocation to key employees of Vertis, ACG and their affiliates.

(ii) Vertis' Advisory Services Agreements with each of Avenue Investments, Goldman Sachs & Co. and TCW Shared Opportunity Fund V, L.P., as advisors. The Agreements provide for the Advisors' retention in Vertis' cases with respect to matters that relate to proposed financial transactions, acquisitions and investments of the company.

The Court will convene a hearing on August 26, 2008, at 10:00 a.m, to consider compliance of the Joint Prepackaged Plans of Reorganization of the ACG and Vertis Debtors. Any objections to the Joint Plan were due August 19.

The company and its six affiliates filed for Chapter 11 protection on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T. Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal & Manges LLP represent as the Debtors lead counsels and Mark D. Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton & Finger, P.A. represent as their Delaware local counsels. Lazard Freres & Co. LLC is the company's financial advisors. When the Debtors filed for protection from their creditors they listed estimated assets between $500 million and $1 billion and estimated debts of more than 1 billion.

About American Color Graphics

American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced fullservice premedia and print companies, with eight print locationsacross the continent, six regional premedia centers, photographystudios nationwide and a growing roster of customer managedservice sites. The company provides solutions and services suchas asset management, photography, and digital workflow solutionsthat improve the effectiveness of advertising and drive revenuesfor their customers.

The company filed and its four affiliates filed for Chapter 11 protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467). Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. Lehman Brothers, Inc. serves as the company's financial advisors. When the Debtors filed for protection from their creditors they listed estimated assets $100 million to $500 million and estimated debts of $500 million to $1 billion.

ACG Holdings, Inc. and American Color Graphics also filed bankruptcy petition under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on July 16, 2008. Jay A. Carfagnini, Esq., David B. Bish, Esq., and Jason Wadden, Esq. at Goodmans LLP are their solicitors. PricewaterhouseCoopers Inc. serves as their CCAA Information Officer.

AMERICAN COLOR: Terms of Employment for PwC as Information Officer------------------------------------------------------------------Simultaneous with their Chapter 11 cases, ACG Holdings, Inc., and American Color Graphics, Inc., commenced ancillary proceedings in the Ontario Superior Court of Justice in Canada under the Companies' Creditors Arrangement Act, seeking recognition of their Chapter 11 cases.

As reported on July 30, 2008, the Canadian Court appointed PricewaterhouseCoopers Inc. as ACG's information officer in the Debtor's CCAA proceedings. PwC is tasked to report to the Canadian Court the status of the ACG Debtors' Chapter 11 cases from time to time.

Pursuant to the Canadian Court's Appointment Order, the ACG Debtors seek the Bankruptcy Court's authority to employ PwC as their information officer.

According to Patrick W. Kellick, ACG's executive vice president, chief financial officer and secretary, PwC's involvement in many of the largest restructurings and bankruptcies in Canada over qualifies it to render information services to the ACG Debtors.

As ACG's Information Officer in connection with the CCAA Proceedings, PwC will:

-- review the status of the ACG Debtors' Chapter 11 cases, provide reports to the Canadian Court; and make recommendations to the Canadian Court, as may be necessary;

-- coordinate with the ACG Debtors and other parties-in- interest with respect to any inquiries the firm receives from ACG's stockholders, among others, in connection with the U.S. and Canadian Court Proceedings; and

PwC will also bill the ACG Debtors for necessary out-of-pocket expenses it incurs, including costs incurred by the firm's independent legal counsel in Canada.

PwC will have no management responsibility or control over the ACG Debtors' operations and will take no responsibility for any of their decisions.

PwC Senior Vice President John McKenna assures the Court that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code.

About American Color Graphics

American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced fullservice premedia and print companies, with eight print locationsacross the continent, six regional premedia centers, photographystudios nationwide and a growing roster of customer managedservice sites. The company provides solutions and services suchas asset management, photography, and digital workflow solutionsthat improve the effectiveness of advertising and drive revenuesfor their customers.

The company filed and its four affiliates filed for Chapter 11 protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467). Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. Lehman Brothers, Inc. serves as the company's financial advisors. When the Debtors filed for protection from their creditors they listed estimated assets $100 million to $500 million and estimated debts of $500 million to $1 billion.

ACG Holdings, Inc. and American Color Graphics also filed bankruptcy petition under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on July 16, 2008. Jay A. Carfagnini, Esq., David B. Bish, Esq., and Jason Wadden, Esq. at Goodmans LLP are their solicitors. PricewaterhouseCoopers Inc. serves as their CCAA Information Officer.

AMERICAN COLOR: Can Hire AlixPartners as Restructuring Advisors---------------------------------------------------------------The U.S. Bankruptcy Court for the District of Delaware gave authority to ACG Holdings, Inc., and its debtor-affiliates to employ AlixPartners, LLC, as their restructuring advisors.

As previously reported in the Troubled Company Reporter on Aug. 12, 2008, the Debtors sought authority from the Court to employ AlixPertners.

As restructuring advisors, AlixPartners is expected to assist the Debtors in:

(a) working with their other advisors' senior management and employees to provide financial consulting services and restructuring advice;

(b) managing their bankruptcy process through working and coordinating with other professionals who represent their stakeholders;

(c) developing short-term cash flow forecasting tool and related methodologies, and in planning for alternatives, as the ACG Debtors may request;

(d) developing an actual-to-forecast variance reporting mechanism, including written explanations of key differences;

(f) obtaining and presenting information required by parties- in-interest in the ACG Debtors' cases, including the Court and the official committees it appoints;

(g) the confirmation of the ACG Debtors' joint prepackaged plans of reorganization with Vertis Holdings, Inc., and its debtor affiliates;

(h) providing testimony before the Court, as necessary; and

(i) certain matters as the ACG Debtors may request.

AlixPartners has advised the Debtors that its services will not beduplicative of the services rendered by other professionals. AlixPartners will coordinate with Lehman Brothers, Inc., theDebtors' financial advisor, to avoid duplication of their work.

AlixPartners will be paid for its services according to thesehourly rates:

AlixPartners will also bill the Debtors for reasonable out-of-pocket expenses that it incurred or may incur in relation tothe contemplated services it is to render.

AlixPartners reserves the right to seek a restructuring fee fromthe ACG Debtors. However, the firm agrees that it will not seekthe Fee in the event that:

-- a merger or other business combination with the Vertis Debtors occurs; or

-- a transfer of the majority of voting control of the Debtors to (i) parties to the Debtors' first lien revolving and term loan facilities; and (ii) the holders of the Debtors' 10% Senior Secured Notes due in 2010.

ACG Executive Vice President, Chief Financial Officer and Secretary Patrick W. Kellick, discloses that the Debtors have paidAlixPartners a $175,000 retainer, $120,258 of which is availableto be held by the firm and applied against fees and expensesremaining at the end of the engagement.

According to the Debtors' books and records, AlixPartners alsoreceived $308,617 as prepetition payment for assisting the Debtorswith respect to preparations for their Chapter 11 cases.

AlixPartners says it may periodically use independent contractorswith specialized skills and abilities to assist in theirengagement with the Debtors. Consequently, AlixPartners willfile, and require the independent contractor to file, affidavitsindicating the disinterestedness of those contractors. Thecontractors should also (i) remain disinterested during the timethat AlixPartners renders services on behalf of the Debtors, and(i) must not work for, while Alix Partners provides servicesto, the Debtors.

The Debtors agree to indemnify AlixPartners from and againstall liabilities in connection with the firm's engagement. Thus,the Debtors ask the Court to approve the provisions under theEngagement Letter.

Brian J. Fox, a director of AlixPartners, assures the Court thathis firm is a "disinterested person" as that term is defined inSection 101(14) of the Bankruptcy Code.

About American Color Graphics

American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced fullservice premedia and print companies, with eight print locationsacross the continent, six regional premedia centers, photographystudios nationwide and a growing roster of customer managedservice sites. The company provides solutions and services suchas asset management, photography, and digital workflow solutionsthat improve the effectiveness of advertising and drive revenuesfor their customers.

The company filed and its four affiliates filed for Chapter 11 protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467). Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. Lehman Brothers, Inc. serves as the company's financial advisors. When the Debtors filed for protection from their creditors they listed estimated assets $100 million to $500 million and estimated debts of $500 million to $1 billion.

ACG Holdings, Inc. and American Color Graphics also filed bankruptcy petition under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on July 16, 2008. Jay A. Carfagnini, Esq., David B. Bish, Esq., and Jason Wadden, Esq. at Goodmans LLP are their solicitors. PricewaterhouseCoopers Inc. serves as their CCAA Information Officer.

AMERICAN COLOR: Court Approves Kirland & Ellis as Lead Counsel--------------------------------------------------------------ACG Holdings, Inc. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Kirkland & Ellis LLP, as their lead attorneys.

Kirkland & Ellis will, among other things:

(a) advise the ACG Debtors with respect to their powers and duties in the continued management and operation of their business and properties;

(b) negotiate and prepare, on behalf of the Debtors -- and obtain approval of -- a disclosure statement and confirmation of a Chapter 11 plan;

Paul M. Basta, a partner at Kirkland & Ellis, assured the Courtthat his firm is a "disinterested person", as defined in Section101(14) of the Bankruptcy Code, as modified by Section 1107(b).

About American Color Graphics

American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced fullservice premedia and print companies, with eight print locationsacross the continent, six regional premedia centers, photographystudios nationwide and a growing roster of customer managedservice sites. The company provides solutions and services suchas asset management, photography, and digital workflow solutionsthat improve the effectiveness of advertising and drive revenuesfor their customers.

The company filed and its four affiliates filed for Chapter 11 protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467). Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. Lehman Brothers, Inc. serves as the company's financial advisors. When the Debtors filed for protection from their creditors they listed estimated assets $100 million to $500 million and estimated debts of $500 million to $1 billion.

ACG Holdings, Inc. and American Color Graphics also filed bankruptcy petition under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on July 16, 2008. Jay A. Carfagnini, Esq., David B. Bish, Esq., and Jason Wadden, Esq. at Goodmans LLP are their solicitors. PricewaterhouseCoopers Inc. serves as their CCAA Information Officer.

AMERICAN COLOR: Court Okays Young Conaway as Bankruptcy Co-Counsel------------------------------------------------------------------The U.S. Bankruptcy Court for the District of Delaware gave authority to ACG Holdings Inc. and its debtor-affiliates to employYoung Conaway Stargatt & Taylor, LLP, as their co-counsel.

As co-counsel to the Debtors, Young Conaway will:

(a) provide legal advice with respect to the ACG Debtors' powers and duties as debtors-in-possession in the continued operation of their business and management of their properties;

(b) pursue the confirmation of the Chapter 11 plan of reorganization and approve the solicitation procedures and disclosure statement;

Patrick W. Kellick, executive vice president, chief financialofficer and secretary of ACG Holdings, reports Young Conawayreceived a $55,195 retainer amounting in connection with theplanning and preparation of initial documents and its proposedpostpetition services and expenses. The firm also received$16,186 for services rendered and expenses incurred throughJuly 4, 2008.

Pauline K. Morgan, Esq., a partner at Young Conaway, assures theCourt that her firm is a "disinterested person" as that term isdefined in Section 101(14) of the Bankruptcy Code. She maintainsthat the firm' partners, counsel and associates:

(a) are not creditors, equity security holders, or insiders of the Debtors;

(b) are not and were not, within two years prior to the bankruptcy filing, directors, officers, or employees of the Debtors; and

(c) do not have an interest materially adverse to the Debtors' estates, creditors and security holders.

About American Color Graphics

American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced fullservice premedia and print companies, with eight print locationsacross the continent, six regional premedia centers, photographystudios nationwide and a growing roster of customer managedservice sites. The company provides solutions and services suchas asset management, photography, and digital workflow solutionsthat improve the effectiveness of advertising and drive revenuesfor their customers.

The company filed and its four affiliates filed for Chapter 11 protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467). Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. Lehman Brothers, Inc. serves as the company's financial advisors. When the Debtors filed for protection from their creditors they listed estimated assets $100 million to $500 million and estimated debts of $500 million to $1 billion.

ACG Holdings, Inc. and American Color Graphics also filed bankruptcy petition under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on July 16, 2008. Jay A. Carfagnini, Esq., David B. Bish, Esq., and Jason Wadden, Esq. at Goodmans LLP are their solicitors. PricewaterhouseCoopers Inc. serves as their CCAA Information Officer.

AMERICAN HOME: Declining Market Prompts Moody's to Review Ratings-----------------------------------------------------------------Moody's Investors Service placed on review the ratings of twelve tranches from two American Home Mortgage transactions issued in 2007. The collateral backing these transactions consists primarily of first lien adjustable-rate and fixed-rate "scratch and dent" mortgage loans.

The actions are part of an ongoing, wider review of all RMBS transactions, in light of the deteriorating housing market and rising delinquencies and foreclosures. Many "scratch and dent" pools originated since 2004 are exhibiting higher than expected rates of delinquency, foreclosure, and REO. The rating adjustments will vary based on level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors.

ARTISTDIRECT INC: Pulier and Boutros Ghali Resign as Directors--------------------------------------------------------------Eric Pulier and Teymour Boutros-Ghali resigned as directors of ARTISTdirect, Inc. on August 12, 2008.

Messrs. Pulier and Boutros-Ghali indicated that they jointly plan to explore the possible acquisition of the company's MediaDefender subsidiary. MediaDefender's core business is Internet-piracy-protection services.

About ARTISTdirect Inc.

Headquartered in Santa Monica, California, ARTISTdirect Inc.(OTC.BB: ARTD) -- http://artistdirect.com/-- is a digital media entertainment company that is home to an online music network and,through its MediaDefender subsidiary, is a provider of anti-piracysolutions in the Internet-piracy-protection industry.

Going Concern Disclaimer/Possible Bankruptcy

Gumbiner Savett Inc. in Santa Monica, Calif., expressedsubstantial doubt about Artistdirect Inc.'s ability to continue asa going concern after auditing the company's consolidatedfinancial statements for the years ended Dec. 31, 2007, and 2006.The auditing firm said that the company is in default under itssenior and subordinated debt agreements.

During 2007 and 2008, the company entered into a series offorbearance agreements with the investors in the senior notes withrespect to these defaults.

On Feb. 7, 2008, the company retained the services of SalemPartners LLC to serve as a financial advisor to the company inconnection with the sale, merger, consolidation, reorganization orother business combination and the restructuring of the materialterms of the company's senior notes and/or subordinatedconvertible notes.

To the extent that the company is unable to complete a sale ormerger or restructure its senior and subordinated debt obligationsin a satisfactory manner or the lenders begin to exerciseadditional remedies to enforce their rights, the company said itwill not have sufficient cash resources to maintain itsoperations. In such event, the company may be required toconsider a formal or informal restructuring or reorganization,including a filing under Chapter 11 of the United StatesBankruptcy Code.

ASCENDIA BRANDS: To Hold Auction on September 18------------------------------------------------Ascendia Brands Inc. and their debtor-affiliates are set to hold a public sale of their assets on Sept. 18, 2008, at 10:00 a.m. at the offices of Kramer Levin Naftalis & Frankel LLP at 1177 Avenue of the Americas in New York City.

Bids are due Sept. 15, 2008, at 4:00 p.m.

The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware will hold a sale hearing on Sept. 24, 2008, at 1:30 p.m.

William Rochelle of Bloomberg News says that the Debtors have not signed an sale agreement with any buyer. Mr. Rochelle noted that the sale is about a week later than what the Debtors originally requested. Mr. Rochelle adds that creditors have opposed to the sale saying it won't benefit them but "amounts to a foreclosure by the secured creditor."

The Troubled Company Reporter said on Aug. 6, 2008, that in conjunction with the Debtors' bankruptcy filing, they are seeking a buyer for the business as a going concern. The Debtors are in talks with prospective buyers and expects to complete a sale by Sept. 30, 2008. The Debtors, however, warned that it do not expect that the sale will result in any recovery to common stockholders.

About Ascendia Brands

Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. --http://www.ascendiabrands.com/-- makes and sells branded consumer products primarily in North America and over 80 countries as well. The company's customers include Walmart, Walgreens, Kmart, MeijerStores, Target, and CVS. The company and six of its affiliatesfiled for Chapter 11 protection on Aug. 5, 2008 (Bankr. D. Del.Lead Case No.08-11787). M. Blake Cleary, Esq., at Young, Conaway,Stargatt & Taylor, represents the Debtors in their restructuringefforts. The Debtors selected Epiq Bankruptcy Solutions LLC astheir claims agent. When the Debtors file for protection againsttheir creditors, they listed total assets of $194,800,000 andtotal total debts of $279,000,000.

The issuer disclosed noteholder approval of an amendment removing Fitch as a rating agency from certain documents of the transaction. As a result of this amendment, Fitch does not expect to receive future reporting for this transaction.

Fitch's policy on withdrawing ratings is to take into consideration whether it has access to sufficient information in assessing the credit quality of the notes. If Fitch decides to cease providing ratings, it will withdraw the ratings using the most current methodology and opinion on the credit risk of the notes. In this case, Fitch has decided to withdraw its ratings on these notes.

Fitch released its updated criteria for corporate CDOs on April 30, 2008.

Ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on-going review process.

The actions are part of an ongoing, wider review of all RMBS transactions, in light of the deteriorating housing market and rising delinquencies and foreclosures. Many "scratch and dent" pools originated since 2004 are exhibiting higher than expected rates of delinquency, foreclosure, and REO. The rating adjustments will vary based on level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors.

Bluegrass III is a cash flow SF CDO that closed on Sept. 15, 2004 and is managed by Invesco Institutional N.A. Inc. Presently, 22.8% of the portfolio is comprised of 2005, 2006 and 2007 vintage U.S. subprime RMBS, and 7.9% consists of 2005, 2006 and 2007 vintage U.S. SF CDOs.

Since Nov. 21, 2007, approximately 45.0% of the portfolio has been downgraded with 11.7% of the portfolio currently on Rating Watch Negative. Additionally, 41.0% of the portfolio is now rated below investment grade, of which 23.9% of the portfolio is rated 'CCC+' and below. Overall, 30.6% of the assets in the portfolio now carry a rating below the rating assumed in Fitch's November 2007 review.

The collateral deterioration has caused each of the overcollateralization ratios to fall below 100% and fail their respective tests. As of the trustee report dated June 30, 2008, the class A/B OC ratio was 86.1%, relative to its trigger of 107.9%. The class C, D-1 and D-2 notes have been paying in kind, whereby the principal balance of the notes are written up by the amount of missed interest, since December 2007. Based on the projected performance of the portfolio, Fitch does not expect the C, D-1, D-2 and combination notes to receive any interest or principal proceeds going forward.

The ratings of the class A-1, A-2 and B notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal as per the transaction's governing documents. The ratings of the class C, D-1, and D-2 notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. The rating of the combination securities addresses the likelihood that investors will receive the combination security notional balance, well as ultimate payments resulting in a 2% coupon.

Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. Fitch will continue to monitor and review this transaction for future rating adjustments.

BUTCHER BOY: To Stay Open and Pay Obligations---------------------------------------------Butcher Boy, which filed for Chapter 11 bankruptcy in July, won't be closing anytime soon, according to co-owner and chef Clint Jolly.

"We've been here for 30 years; we'll be here another 130 years," he said, according to the report. He emphasized the company's commitment to stay open and pay "everybody."

CALPINE CORP: Panda Energy to Appeal Decision Barring $200MM Claim------------------------------------------------------------------According to Bankruptcy Law360, Panda Energy International Inc. will appeal a decision by a bankruptcy judge that denies the company's $200 million in claims against Calpine Corp. over a contract related to Panda power plants.

Based in San Jose, California, Calpine Corporation (OTC PinkSheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, naturalgas-fired and geothermal power plants. Calpine owns, leases andoperates integrated systems of plants in 21 U.S. states and inthree Canadian provinces. Its customized products and servicesinclude wholesale and retail electricity, gas turbine componentsand services, energy management and a wide range of power plantengineering, construction and maintenance and operationalservices.

On June 20, 2007, the Debtors filed their Chapter 11 Plan andDisclosure Statement. On Aug. 27, 2007, the Debtors filed theirAmended Plan and Disclosure Statement. Calpine filed a SecondAmended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed aThird Amended Plan. On Sept. 25, 2007, the Court approved theadequacy of the Debtors' Disclosure Statement and entered awritten order on September 26. On Dec. 19, 2007, the Courtconfirmed the Debtors' Plan. The Amended Plan was deemedeffective as of January 31, 2008.

The affirmations reflect limited scheduled amortization and stable performance since issuance. As of the July 2008 distribution date the transaction's outstanding principal balance has been reduced by 0.2% to $4.75 billion from $4.76 billion at issuance.

Two loans, representing 0.2% of the pool, are currently in special servicing. The first loan (0.17%) is collateralized by an extended stay hotel in Pensacola, Florida. The property had been a major provider of off-base housing for the military until August 2007, when the Navy notified the borrower that it had sufficient on-base housing. Losses are likely, but they are expected to be minimal and not impact credit enhancement.

The second specially serviced loan (0.04%) is secured by a retail center in Arlington, Texas. The loan was transferred to the special servicer due to the borrower failing to make debt payments for the months of June and July. Losses are likely, but they are not expected to impact credit enhancement given the loan's size relative to the trust.

The largest shadow rated loan, Ala Moana Portfolio (2.1%), is secured by the fee interest in a 1.9 million sf retail and office development in Honolulu, Hawaii. Ala Moana Center is one of the most productive retail assets in the nation, with sales for in-line tenants consistently exceeding $1,000 per square foot. The retail portion of the collateral is occupied by nearly 275 tenants, while the office portion is occupied by 184 tenants. The mall is sponsored and operated by General Growth Properties. Occupancy as of December 2007 was 94%, inline with 93.5% at issuance.

CHARYS HOLDING: Files Joint Plan of Reorganization w/ Non-debtors-----------------------------------------------------------------Charys Holding Company, Inc. and Crochet & Borel Services, Inc., along with their non-debtor affiliates, Complete Tower Sources, Inc., LFC, Inc., Mitchell Site Acq., Inc., and Cotton Commercial USA, Inc., filed the Joint Plan of Reorganization of Debtors and Certain Non-debtor Affiliates under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware on August 4, 2008.

The Plan is being jointly proposed by the Debtors and the Affiliated Plan Proponents. As such, in addition to the claims and interests of the creditors and equity security holders of the Debtors, the Plan also addresses the claims of the holders of the 8.75% Senior Convertible Notes against the Affiliated Plan Proponents which have guaranteed such claims.

The Plan provides for the creation of a new holding company which, following certain restructuring transactions described in the Plan, will hold virtually all of the common stock of each of the Affiliated Plan Proponents. Upon consummation of the Plan, the equity interests in New Holdco will be held by the holders of the 8.75% Senior Convertible Notes (in the outstanding amount of approximately $210 million as of the Commencement Date), the holders of similar notes issued by Charys Holding (in the outstanding amount of approximately $8 million as of' the Commencement Date), and by the Charys Liquidating Trust.

Additionally, New Holdco will issue new secured notes to the holders of the 8.75% Senior Convertible Notes and the Mirror Notes. The New Secured Notes will have an aggregate face amount of $20 million, pay interest at a rate of 15% per annum, and mature four years from issuance.

Pursuant to the Plan, all assets of Charys Holding, including the equity interests in the Affiliated Plan Proponents received by Charys Holding on account of certain intercompany claims (which would be exchanged for approximately 6% of the outstanding equity interests in New Holdco), will he transferred to a liquidating trust for the benefit of the creditors of Charys Holding.

Other than the equity interests in New Holdco, these assets consist primarily of potential litigation claims that Charys Holding’s estate holds against third parties. The holders of Subordinated Debt Claims against Charys Holding and holders of existing stock of Charys Holding will receive no distribution pursuant to the Plan on account of their claims or interests, and such claims and interests will be extinguished under the Plan.

All assets of C&B will be transferred to a liquidating trust for the benefit of the creditors of C&B. The holders of the 8.75% Senior Convertible Notes are waiving their right to share, with holders of general unsecured claims against C&B, in the distributions from the C&B Liquidating Trust. The assets of the C&B Liquidating Trust will consist primarily of outstanding accounts receivable of C&B. The holders of the 8.75% Senior Convertible Notes will receive no distribution from C&B or the C&B Liquidating Trust on account of their claims.

There are various claims which are secured by or otherwise have prior interests in the accounts receivable of C&B and such claims are to be paid before any distribution will he made from the C&B Liquidating Trust to holders of general unsecured claims against C&B.

The following is a brief summary of the proposed distributions to be made under the Plan to the various classes of claims and equity interests.

-- Administrative expense claims and other claims entitled to priority in payment under the Bankruptcy Code largely will he paid in full.

-- Any secured claim against Charys Holding or C&B will be paid in full or receive the proceeds of the collateral securing such claim.

-- The claims against Charys Holding (other than the Mirror Notes) held by the sellers of certain businesses to Charys Holding consisting of what is now CTSI, MSAI and Cotton, will enter into settlement agreements with Charys Holding pursuant to which the parties will mutually release claims and new employment agreements will be entered into.

-- The holders of the 8.75% Senior Convertible Notes issued by Charys Holding and the holders of the Mirror Notes will receive (a) approximately 94% of the equity interests in New Holdco, and (b) the New Secured Notes.

-- Holders of general unsecured claims against Charys Holding (including holders of the 8.75% Senior Convertible Notes and Mirror Notes) will receive on a pro rata basis, distributions from the Charys Liquidating Trust from proceeds of assets not subject to liens or security interests, after all prior claims against the Charys Liquidating Trust have been paid.

-- Holders of Claims against Charys Holding which are subordinated in right of payment to other claims will receive no distribution under the Plan.

-- Existing equity interests in Charys Holding will receive no distribution under the Plan and will be cancelled.

-- Holders of general unsecured claims against C&B will receive on a pro rata basis, distributions from the C&B Liquidating Trust from proceeds of assets not subject to liens or security interests, after all prior claims against the C&B Liquidating Trust have been paid.

-- Existing equity interests in C&B will receive no distribution and will he cancelled.

A hearing to consider approval of the proposed Disclosure Statement in respect of the Plan is currently scheduled before the Court on September 15, 2007. A hearing to consider confirmation of the Plan has not yet been scheduled.

CHARYS HOLDING: Can Use Cash Collateral to Pay Off Expired Claims-----------------------------------------------------------------The U.S. Bankruptcy Court for the District of Delaware signed off on an agreement allowing Charys Holding Co. Inc. to use $8.3 million in cash collateral to pay back some of its noteholders' expired claims, ABIWorld says, citing a report from Bankruptcy Law360.

Under the agreement, Charys will use proceeds from the sale of several cell phone towers in order to pay off expired promissory notes to Imperium Master Fund Ltd., Jed Family Trust and John Michaelson, according to the report. The Debtor's subsidiary, Ayin Tower Management Services Inc., sold the cell phone towers and related assets to Crown Communications Inc. for approximately $14 million. The agreement relates that $5.39 million of that sale that was placed into escrow will be used to pay Imperium and the other noteholders.

The bankrupt company agreed to pay back the remainder of those noteholder debts by Nov. 15, according to the agreement.

The ratings downgrade was prompted by on-going weakness in the company's operating performance as the company's revenue and EBITDA have been pressured by internal operating challenges and an increasingly difficult economic and radio advertising environment. The year-on-year revenue declines have resulted in weak credit metrics, including high debt-to-EBITDA leverage of 7.95x at June 30, 2008. While Citadel has continued to apply free cash flow to reduce debt, the declines in its EBITDA have prevented any progress in de-leveraging.

In Moody's view, the company is unlikely to achieve the 6.0x leverage target over the next 18-24 months that had been factored into the Ba3 rating. In addition, Moody's believes that Citadel's margin of covenant compliance will narrow considerably when the leverage covenant steps down in fourth quarter 2008, which was the primary reason for the SGL downgrade. The SGL-3 rating reflects Moody's view that the company would most likely receive waivers from its lenders if it were to violate its leverage covenant in light of its positive free cash flow.

Moody's will continue its review of Citadel's ratings in order to assess the company's ability to sustain and improve revenue, EBITDA margins and free cash flow in the context of the current weak operating environment such that debt-to-EBITDA leverage and other credit metrics show meaningful improvement from current levels.

Citadel Broadcasting Corporation, headquartered in Las Vegas, Nevada, is a radio broadcaster comprised of 165 FM and 58 AM stations in more than 50 markets. The company's 2007 pro-forma revenues were approximately $945 million.

Moody's is downgrading pooled class L and rake classes RAM-1 and RAM-2, which were placed on review for possible downgrade on July 17th, 2008, based on a decline in Moody's estimate of property value for the Radisson Ambassador Plaza Hotel and Casino in San Juan, Puerto Rico.

The Radisson Ambassador Plaza Hotel and Casino Loan is secured by a 233 room full-service hotel with a 15,000 square feet casino located in San Juan, Puerto Rico. Casino revenue, which currently represents more than 50% of the total revenue from the property, has declined since securitization. Year end 2005 casino revenue of $19.6 million declined to $17.7 million as of year end 2007.

Property operating expenses have also increased since securitization. The loan sponsors are Whitehall Street Global Real Estate LP 2001 and Caribbean Property Group. Due to the decline in property performance, Moody's current pooled trust balance underlying rating is Ba1 compared to Baa2 at securitization.

CITY CROSSING: Reaches Deal on Debt for $2BB Project ----------------------------------------------------Hubble Smith of Las Vegas Review-Journal reports that developer William Plise agreed with creditors regarding most of the amounts owed on the $2 billion City Crossing mixed-use development in Henderson.

Plise filed a plan of reorganization on July 2 seeking to market and sell the City Crossing project and distribute the proceeds based on order of priority, according to the report. A court-ordered settlement conference is scheduled for September before U.S. Bankruptcy Court Judge Gregg Zive in Reno. The conference will enhance the chances that the reorganization plan will be successful, Community Bank of Nevada, one of the creditors, believes, according to the report. Community Bank of Nevada has lent about $30 million toward the development of City Crossing, a July report by the Troubled Company Reporter stated.

Mr. Plise said he's hoping for the successful restructuring of short-term debt obtained in early 2007, most of which matured in April, according to the report. Outstanding balances on the Debtor's loans are hard to pin down due to the structure of some loans, the report said.

As reported by the TCR on July 1, the Chief Operating Officer of an entity controlling City Crossing 1 LLC, said the bankruptcy of the developer of the $2 billion-mixed use development in Henderson, Nevada, will not stop the project. "We are not stopping development. We have sufficient capital to fund this work," Plise Development & Construction COO Mitchell Stipp said.

"We expect to have the debt reorganized within the next three to five months," Mr. Stipp said.

Las Vegas, Nevada-based City Crossing 1, LLC filed for Chapter 11 protection on June 2, 2008 (Bankr. D. Nev. Case No. 08-15780). Jeanette E. McPherson, Esq., at Schwartzer & McPherson Law Firm, represents the Debtor in its restructuring efforts. The Debtor had proposed to hire White & Case LLP as its primary bankruptcy counsel. In its schedules, the Debtor disclosed total assets of $242,025,172, and total debts of $194,201,534.

The issuer disclosed noteholder approval of an amendment removing Fitch as a rating agency from certain documents of the transaction. As a result of this amendment, Fitch does not expect to receive future reporting for this transaction.

Fitch's policy on withdrawing ratings is to take into consideration whether it has access to sufficient information in assessing the credit quality of the notes. If Fitch decides to cease providing ratings, it will withdraw the ratings using the most current methodology and opinion on the credit risk of the notes. In this case, Fitch has decided to withdraw its ratings on these notes.

Fitch released its updated criteria for corporate CDOs on April 30, 2008.

CONSECO INC: Moody's Lowers Bank Debt's Rating From Ba3 to B1-------------------------------------------------------------Moody's Investors Service downgraded the rating of Conseco, Inc.'s bank debt to B1 from Ba3 and moved the outlook on Conseco to negative from stable. In the same rating action, Moody's downgraded the insurance financial strength ratings of CNO's insurance subsidiaries, with the exception of Conseco Senior Health Insurance Company, to Ba1 from Baa3, with a stable outlook. The rating action concludes a review for downgrade that was initiated on April 17, 2008.

Moody's continues the review with direction uncertain on these rating:

Conseco Senior Health Insurance Company

-- insurance financial strength rating at Caa1;

According to Scott Robinson, Moody's Vice President and Senior Credit Officer, "Our rating action was largely predicated on the company's sub-par earnings results and a deterioration in statutory capital. We believe that while management has taken meaningful steps to improve Conseco's operations, the company still faces significant challenges ahead."

The rating agency noted that while the recently announced plan to transfer CSHIC to an independent trust lays the groundwork for improvement in CNO's credit profile, it also results in diminished room under existing bank loan financial covenants, leaving the company less margin for financial and operational errors over the near to medium term. The negative outlook on the holding company along with a stable outlook on the operating companies reflects the potential for wider notching between the holding company ratings and the IFS ratings of the insurance subsidiaries.

Conseco reported second quarter net operating earnings before a valuation allowance for deferred tax assets and net realized investment losses of $33.4 million, up from a $49.7 million loss in the same period one year ago. The recent quarter's earnings, notably the results of the Bankers Life Segment, were below Moody's expectations. According to Robinson, "One-time charges, including a $26 million decrease in earnings related to long-term care policies at Bankers hurt earnings."

Moody's said that the following would place upward pressure on the company's ratings: the absence of material "one-time" earnings charges; annual run-rate consolidated statutory EBIT of at least $150 million; mitigation of the level of risk and uncertainty associated with the company's long-term care block; and RBC ratio on a consolidated basis above 300%. Conversely, the following would place downward pressure on the ratings: adjusted GAAP EBIT coverage of below two times; RBC ratio on a consolidated basis below 275%; or annual run-rate consolidated statutory EBIT below $125 million.

The last rating action on Conseco took place on August 13, 2008, when Moody's changed the rating review on CSHIC from downgrade to direction uncertain. The action followed an announcement by Conseco Inc. of a plan to transfer CSHIC to an independent trust.

Conseco is a specialized financial services holding company that operates primarily in the life and health insurance sectors through its subsidiaries. As of June 30, 2008, Conseco reported total assets of $32.6 billion and shareholder's equity of $3.3 billion.

CPG INT'L: Moody's Confirms 61% Sr. Unsec. Note's Rating at B3--------------------------------------------------------------Moody's Investors Service changed CPG International I Inc.'s rating outlook to negative from stable, and affirmed its credit ratings including its B2 corporate family rating and probability of default ratings.

The previous rating action on CPG was the affirmation of the SGL-2 rating on June 22, 2007.

The negative outlook reflects Moody's expectation that reduced demand for CPG's AZEK residential products, increased resin input prices and continuing deterioration of the residential housing and remodeling markets will pressure the company's earnings and cash generation well into 2009. Recent deterioration in operating performance has resulted in debt-to-EBITDA leverage approaching 6.0x, on a proforma basis, which is high for its current B2 rating. If the company's recent price increases do not take hold or sales volumes deteriorate further, its margins will likely remain under pressure. The company's comfortable liquidity profile and market share gains partially mitigate immediate credit pressures.

CPG, headquartered in Scranton, Pennsylvania, is a manufacturer and fabricator of engineered and branded synthetic products designed to replace wood and metal in a variety of building materials and industrial applications. CPG generated net revenues of approximately $312 million in the last twelve months ended June 30, 2008.

Fitch does not rate the $15.5 million class P. Classes A-1 and A-2 have paid in full.

The upgrades reflect the increased credit enhancement levels due to principal paydown of 16.5% due to loan payoffs and scheduled amortization since Fitch's last rating action. As of the July 2008 distribution date, the pool's aggregate principal balance has decreased 25.9% to $934.2 million from $1.26 billion at issuance. Eighteen loans are defeased, including the second and third largest loans in the transaction (9.6%).

Fitch has identified fourteen loans (13.7%) as Fitch loans of concern due to declining performance. T he largest Fitch loan of concern (2.6%), which is in special servicing, is secured by a 438 unit multifamily property located in Houston, Texas. The loan was transferred to the special servicer due to monetary default. The special servicer started foreclosure proceeding and the borrower, MBS Cos., filed for bankruptcy. The loan is over 90 days delinquent. The property is currently under contract for sale and has been approved by the bankruptcy court. Minimal losses are expected as the loan is expected to be assumed and returned to the master servicer.

The second largest Fitch loan of concern (1.8%) is secured by a 173 unit multifamily property in Baltimore, Maryland. The servicer reported Debt Service Coverage Ratio as of year end 2007 was 0.37 times (X) with occupancy at 95%, compared to DSCR of 1.29x with occupancy at 92% at issuance. The decline in performance is the result of additional capital improvements made by the borrower and increased utility expenses.

Fitch has reviewed the remaining two shadow rated loans: Mall at Fairfield Commons and Paramount Plaza. The Mall at Fairfield Commons loan maintains its investment-grade shadow rating due to stable performance since issuance. The Paramount Plaza loan has defeased.

The Mall at Fairfield Commons loan (7.2%) is secured by 856,879 square foot (sf) of a 1,046,726 sf regional mall in Beavercreek, OH. As of June 30, 2008, the occupancy improved slightly to 96.6% from 95.5% at issuance. The loan is scheduled to mature in November 2014.

Three loans (0.6%) are scheduled to mature in 2008, all of which are secured by multifamily properties. The interest rate on these loans ranges from 5.05% to 7.1% with weighted average coupon at 6.11%. One loan (0.1%) has passed the maturity date but is performing. Fitch is monitoring the status of this loan.

CREDIT AND REPACKAGED: Moody's Puts Three Tranche Notes at Low-B----------------------------------------------------------------Moody's Investors Service downgraded the rating of these notes issued by Credit and Repackaged Securities Limited 2006:

According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of corporate synthetic securities.

The downgrade is a result of the Resorts Atlantic City (11.7%) not performing to expectations. The Resorts Atlantic City is a 942-room casino and hotel located in Atlantic City, New Jersey. Total debt on the loan is $360 million, which consists of a $175 million senior component which is held in the trust and a $185 million junior component held outside the trust. As of first-quarter 2008, the property's net cash flow declined approximately 58% from Fitch's stressed net cash flow at issuance. The decrease in cash flow is attributed to multiple factors: increased competition, a smoking ban introduced throughout the entire Atlantic City gaming market, and the overall negative performance of the gaming industry due to general macro-economic conditions throughout the U.S. For the first three months ended March 31, 2008, the Atlantic City gaming market recorded a 17.7% decrease in gross operating profit from the same period in 2007. Fitch does not expect the cash flow to reach the same levels as at issuance.

Fitch maintains Rating Watch Negative on rake classes related to Biscayne Landing (10.9%) as a result of the transfer to special servicing for default. The borrower failed to meet the mandatory prepayment of $17 million that was due on Jan. 30, 2008. Any resolution costs or potential losses could be incurred by one or more of the BSL rake classes, which are collateralized by the non-pooled senior portions of the Biscayne Landing loan and are subordinate to the pooled senior portion. Biscayne Landing is the largest undeveloped parcel of urban land in South Florida, consisting of 188 acres in North Miami. The original development plan that revolved around a master planned community has been modified by the borrower to better represent current demand, and the city recently approved an alternative town center commercial concept with a reduced residential component and the inclusion of big box retail and in-line space in addition to entertainment, office, and hotel venues. The Biscayne Landing loan matures on May 9, 2009 and has two one-year extension options.

The affirmations are due to expected performance and continued stabilization of the remaining loans since issuance. As of the July 2008 distribution date, the transaction's aggregate principal balance has decreased 0.62%. All of the original eight loans remain in the trust. Of the loans scheduled to mature in 2008, all have extension options ranging from two to three years.

The largest loan is secured by the Planet Hollywood Resort and Casino in Las Vegas, Nevada. The property is in the midst of a $178 million renovation and re-development project that includes substantial improvements to the facade, casino, restaurants, and guestrooms. Renovations are nearing completion, with the final 1,076 guestrooms on schedule to be completed prior to the 2008 holiday season. The loan's initial maturity is Dec. 12, 2008, with three, one-year extension options.

The action is part of an ongoing, wider review of all RMBS transactions, in light of the deteriorating housing market and rising delinquencies and foreclosures. Many "scratch and dent" pools are exhibiting higher than expected rates of delinquency, foreclosure, and REO. The rating adjustments will vary based on level of credit enhancement, collateral characteristics, pool-specific historical performance, quarter of origination, and other qualitative factors.

DELTA FINANCIAL: Has Until September 15 to File Chapter 11 Plan---------------------------------------------------------------The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware extended the exclusivity period for Delta Financial Corp., which said last month that it is close to reaching an agreement with its creditors, ABIWorld cites a report from Bankruptcy Law360.

Judge Sontchi's order filed Monday said that Delta will have until Sept. 15 to file a plan, and until Nov. 17 to solicit acceptances. In its motion for the extension, filed July 25, Delta said it had made significant progress in negotiations with its creditors, and had reached agreement on "the majority of the terms" of a liquidation plan. However, the company said, it needed more time to work out certain details and to continue evaluating the validity of the roughly 400 claims, amounting to about $520 million, against its estate.

The issuer disclosed noteholder approval of an amendment removing Fitch as a rating agency from certain documents of the transaction. As a result of this amendment, Fitch does not expect to receive future reporting for this transaction.

Fitch's policy on withdrawing ratings is to take into consideration whether it has access to sufficient information in assessing the credit quality of the notes. If Fitch decides to cease providing ratings, it will withdraw the ratings using the most current methodology and opinion on the credit risk of the notes. In this case, Fitch has decided to withdraw its ratings on these notes.

Fitch released its updated criteria for corporate CDOs on April 30, 2008.

DYNASTY OIL: Barred from Filing Case Against Bankruptcy Manager---------------------------------------------------------------The Fifth U.S. Circuit Court of Appeals held on Aug. 12, 2008, that Dynasty Oil and Gas LLC, after confirmation of its chapter 11 plan, can't sue a third party for mismanagement during a bankruptcy proceeding, William Rochelle of Bloomberg News states.

All of the Debtor's property were sold under the plan; the proceeds of the sale were distributed among creditors, Mr. Rochelle notes.

According to Mr. Rochelle, although the plan provided that the Official Committee of Unsecured Creditors and the Debtor may pursue "any and all claims," Circuit Chief Judge Edith Jones ruled that the Debtor lacked standing to sue its manager which was hired during the pendency of the bankruptcy case.

Judge Jones stated the Dynasty Oil's debtor-in-possession status ended upon confirmation of its plan, Mr. Rochelle reports. Judge Jones, Mr. Rochelle says, added that Dynasty Oil should have clearly provided in its plan that it intended to pursue a case against a third party after confirmation. Absent this provision, creditors don't have enough information on which to base their vote for or against the plan, Mr. Rochelle quotes Judge Jones as stating.

Midland, Texas-based Dynasty Oil and Gas, L.L.C. filed its chapter 11 petition on Feb. 26, 2004 (Bankr. W.D. Tex. Case No. 04-70118). Judge Ronald B. King presided over the case. Roy Byrn Bass, Jr., Esq., at Harding, Bass et al., represented the Debtor in this case. When the Debtor filed for bankruptcy, it estimated assets at between $1 million to $10 million and debts at between $1 million to $10 million.

EAGLE CREEK: Wants Noteholder Committee Appointed-------------------------------------------------Eagle Creek Subdivision, LLC and its debtor-affiliates ask authority from the U.S. Bankruptcy Court from the Eastern District of North Carolina to appoint a committee representing holders of junior deeds of trust on certain of the Debtors' property.

Each of the Debtors' property is encumbered by deeds of trust in favor of certain individuals or entities who have loaned funds with the Debtors on a junior priority basis. These deeds of trust share priority pursuant to a participation agreement pari passu.

There are 100 noteholders between the five Debtors and other affiliated non-filing entities. Some noteholders have invested in multiple projects.

The Debtors contend that the appointment of the "Committee of Noteholders" is necessary to provide representation for this important group, since the committee will help streamline negotiations between lienholders and the Debtors by having a group of Noteholders speak on behalf of all the noteholders. Additionally, they say, the committee will also ease the administrative burden on the Debtors.

The Debtors will provide a list of noteholders who will be included the Committee.

About Eagle Creek

Charlotte, North Carolina-based Eagle Creek Subdivision, LLC, and its debtor-affiliates are real estate developers managed by Landcraft Management LLC. Eagle Creek owns 489 lots worth about $24.5 million. The companies are also known as Landcraft Properties or Landcraft Communities.

ELECTROHOME LTD: Shareholders to Consider Plan on September 11--------------------------------------------------------------Electrohome Limited disclosed that the Ontario Superior Court of Justice has authorized the company to hold a special meeting of its Class X and Class Y shareholders on Sept. 11, 2008, to approve a Plan of Arrangement.

On Aug. 5, 2008, Electrohome reported its plan to wind-up the company pursuant to a court supervised Plan of Arrangement. ThePlan of Arrangement proposed by the company under the BusinessCorporations Act provides an expeditious and efficient way for thecompany to sell its remaining assets, satisfy its outstanding obligations and maximize the amount of residual proceeds that can be distributed to its shareholders prior to the dissolution of the Corporation, all in an orderly fashion within a condensed and finite timeframe under the supervision of the Court.

The record date for the special meeting has been set at Aug. 11, 2008.

The proposed Plan of Arrangement includes the sale of the company's investment in Mechdyne Corporation, fulfillment and discharge of the company's outstanding liabilities and obligations, cancellation of the issued and outstanding Class X Shares and the Class Y Shares, delisting of the company's shares from the NEX board of the TSX Venture Exchange and the ceasing of the company to be a reporting issuer, change of the company's name to ELXY Holdings Inc., change in the company's minimum number of directors from 3 to 1, appointment of an administrative agent toassist the company with implementation of the Plan of Arrangement,distribution to shareholders of any residual proceeds, and dissolution of the company.

As part of the Plan of Arrangement the company proposes to sell its shares of Mechdyne Corporation, which the company carried on its books for C$4,000,000 back to Mechdyne in exchange for an initial cash payment of $616,444 (C$xxxxx) and a 10 year promissory note in the amount of $3,082,222 (C$xxxxx)bearing interest at an annual rate of 4.3% with principal payments subject to Mechdyne's annual earnings. Since the company intends to wind up its operations, the company's chairman, president, chief executive officer and controlling shareholder, Mr. John A. Pollock, has agreed to purchase the 10 year promissory note from the company for a cash amount of $2,394,592 (C$xxxxx).

A committee of independent directors of the company reviewed the proposed sale transactions and engaged an independent Chartered Business Valuator to provide the committee with an independent fairness opinion. The CBV concluded that that the proposed transaction is fair to the shareholders from a financial perspective.

In the interests of maximizing the amount of residual proceeds that can be distributed to shareholders, Mr. Pollock has also agreed to forgo payment of approximately $450,000 (C$xxxxx)with respect to the funding of his supplemental retirement plan with the Corporation. An independent actuary has determined that the liability of the company to fully fund the retirement benefitsunder this plan is approximately $700,000 (C$xxxxx).

The company stated that if proposed Plan of Arrangement is approved, the company must have sufficient funds to satisfy its remaining obligations and perhaps provide a final distribution to its shareholders prior to the formal dissolution. If the Plan is not approved, the company may be forced into insolvency proceedings.

Electrohome Limited also disclosed on Aug. 7, 2008, that itssubsidiary, 2112126 Ontario Inc., closed the sale of its land onVictoria Street in Kitchener, Ontario. The property is undergoingremediation and rehabilitation as a result of contamination from a discontinued historic operation. The property was sold on an "as is" basis for nominal consideration with the purchaser agreeing to remediate the property.

As a result of the sale, Electrohome will take approximately $375,000 into income in the fourth quarter being the reversal of the remaining related remediation accrual in its financial statements.

Results for Three Months Ended June 30, 2008

A loss for the third quarter of C$1,279,000 compares to a loss of C$184,000 last year.

There was no income for the third quarter of fiscal 2008. Income from the third quarter of fiscal 2007 consisted of royalty income of C$69,000 and investment income from marketable securities of C$7,000.

During the third quarter of fiscal 2008, the company wrote down its investment in Mechdyne Corporation by C$955,000 due to the subsequent transactions associated with Mechdyne, which provide evidence as to the fair value of that investment at June 30, 2008.

Results for Nine Months Ended June 30, 2008

A loss for the first nine months of fiscal 2008 of C$311,000 compares to a loss of C$189,000 last year.

Royalty income of C$78,000 compares to C$260,000 last year. The decrease is a result of one quarter of royalties in fiscal 2008 versus three quarters in fiscal 2007 and also due to lower sales of Electrohome branded products during the first quarter.

There was no investment income from marketable securities for the nine months of fiscal 2008 as they were completely sold during fiscal 2007. Investment income was $54,000 for the nine months of fiscal 2007.

During the third quarter of fiscal 2008, the Corporation wrote down its investment in Mechdyne Corporation by C$955,000 due to the subsequent transactions associated with Mechdyne, which provide evidence as to the fair value of that investment at June 30, 2008.

During the second quarter of fiscal 2008 the company recorded a gain on sale of the company's trademarks of C$1,500,000 as noted above.

During the second quarter of fiscal 2007, the company realized a net gain of C$328,000 for surplus received from the Hourly Pension Plan under a surplus sharing arrangement with the members of that Plan.

Liquidity and Cash Flows

During the third quarter of fiscal 2008 cash decreased C$313,000 as it was used by operations.

During the third quarter of fiscal 2007 cash decreased C$120,000. Cash was generated by the sale of marketable securities of $175,000 and it was used by operations of C$295,000.

For the nine months ended June 30, 2008, cash increased C$368,000. Cash was generated from proceeds of C$1,500,000 from the sale of the company's trademarks effective Jan. 1, 2008, and from $300,000(C$xxxxx) of advances from the purchaser of the trademarks. Cash used to repay in its entirety, the advances of C$600,000 associated from the sale of the trademarks and was used by operations of C$832,000.

For the nine months ended June 30, 2007, cash increased C$4,000. Cash was generated by the sale of marketable securities of C$550,000. It was used by operations of $529,000 (C$xxxxx)and to reduce other liabilities of C$17,000

At June 30, 2008, the company's balance sheet showed total assets of C$3.6 million , total liabilities of C$2.2 million and shareholders' equity of approximately C$1.4 million.

Going Concern Doubt

The company said its only significant cash inflow will consist of proceeds from the sale of its investment in Mechdyne, however, the timing and amount of any potential proceeds is subject to the satisfaction of various conditions. Current annual cash outflows of the company are approximately C$1,200,000. Consequently, given management's best estimate of future actions, it is estimated that the company would run out of funds in the first quarter of fiscal 2009.

About Electrohome Limited

Headquartered in Ontario, Canada, Electrohome Limited (CVE:ELL.K) -- http://www.electrohome.com/-- along with its subsidiaries, is an international company focused on the development and marketing of turn-key, three-dimensional and audiovisual solutions. The company is a holding company with a 31% interest in Mechdyne Corporation, which is an international company operating in the visualization marketplace.

ELLIOTT OUTDOORS: Files for Chapter 11 Bankruptcy-------------------------------------------------Increased competition and higher prices for basic necessities led sporting goods store Elliott Outdoors to file for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code, said James Dusenberry, an investor in the company, according to Ned B. Hunter of Jackson Sun reports. The competition came mainly from Gander Mountain, which opened on Sept. 11. In 2006, Elliott Outdoors reported sales of nearly $2.3 million, according to court records. The figure gradually fell until during it bankruptcy in July, sales were only $285,765.

Elliott Outdoors specializes in fishing and hunting products. It opened in September 2005 and filed for voluntary Chapter 11 in early July in the U.S. Bankruptcy Court for the Western District of Tennessee. The Debtor declared more than $291,000 in assets as of the filing date.

These actions reflect EMBS IV's portfolio liquidation. The class A-1 notes have been paid in full. The class A-2 notes have received $3,127,316 in principal distributions and will receive approximately $3,700,000 in additional principal payments in mid September. The class A-2 final recovery level will be approximately 48% and receives a 'DR4' recovery rating. Classes A-3 and A-4 will not receive any principal payments. The preference share rating is principal only and is credited with the $8,287,314 of interest payments received to date. The recovery is 27.6% and therefore receives a 'DR5' recovery rating.

FANNIE MAE: Looks to Refinance $225 Billion by End of Sept. 2008----------------------------------------------------------------Fannie Mae and Freddie Mac are looking for ways to refinance $225 billion worth of debt by the end of September as investors remain cautious about the two government-sponsored enterprises, reports ABIWorld.

Shares of both companies have been hammered for weeks by fears they would no longer be able to function, a problem that would likely cripple the U.S. housing market, says ABIWorld. As reported by the Troubled Company Reporter, the U.S. Congress in July gave the U.S. Treasury Department the authority to lend money to Fannie and Freddie or take an equity stake. Because investors have little idea how Treasury would intervene, they have become less enthusiastic about adding Fannie or Freddie debt to their portfolios, creating a potentially self-fulfilling spiral, ABIWorld reports.

About Fannie Mae

The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --commonly known as Fannie Mae, is a shareholder-owned U.S.government-sponsored enterprise. Fannie Mae has a federal charterand operates in America's secondary mortgage market, providingmortgage bankers and other lenders funds to lend to home buyers atlow rates.

Fannie Mae was created in 1938, under President Franklin D.Roosevelt, at a time when millions of families could not becomehomeowners, or risked losing their homes, for lack of a consistentsupply of mortgage funds across America. The governmentestablished Fannie Mae to expand the flow of mortgage funds in allcommunities, at all times, under all economic conditions, and tohelp lower the costs to buy a home.

In 1968, Fannie Mae was re-chartered by the U.S. Congress as ashareholder-owned company, funded solely with private capitalraised from investors on Wall Street and around the world.

Fannie Mae is the U.S. largest mortgage buyer, according to TheNew York Times.

FOAMEX INTERNATIONAL: Unable to Toss Out ERISA Class Action Claims------------------------------------------------------------------A class action brought by a former Foamex LP worker accusing the bankrupt foam maker of breaches of duty stemming from its management of an employee savings plan has survived a motion to dismiss, with a federal judge letting stand six of eight claims in the suit, says Bankruptcy Law360.

On Feb. 2, 2007, the Court confirmed the Debtors' Second AmendedJoint Plan of Reorganization. The Plan of Reorganization ofFoamex International Inc. became effective and the company emergedfrom chapter 11 bankruptcy protection on Feb. 12, 2007.

* * *

As reported in the Troubled Company Reporter on April 8, 2008,Foamex International Inc.'s consolidated balance sheet at Dec. 30,2007, showed $430.6 million in total assets and $728.7 million intotal liabilities, resulting in a $298.1 million totalstockholders' deficit.

FOAMEX LP: Moody's Confirms $55 Mil. Senior Loan's Rating at Caa1-----------------------------------------------------------------Moody's Investors Service changed Foamex L.P.'s ratings outlook to negative from stable. This action results from the ongoing economic pressures that Foamex faces due to the continued downturn in its end markets including the domestic housing and automotive sectors, the main drivers of Foamex L.P.'s revenues. In a related rating action Moody's affirmed the company's corporate family rating of B2 and the probability of default of B2, but lowered the rating of its first lien senior secured term loan to B2 from B1 while maintaining the Caa1 rating on the second lien senior secured term loan consistent with Moody's Loss Given Default model.

-- $55 million second lien senior secured term loan due 2014 affirmed at Caa1, buts its loss given default assessment is changed to (LGD5, 81%) from (LGD5, 84%).

The B2 corporate family rating incorporates the recent reduction in balance sheet debt to about $400 million from $541 million at the end of first quarter 2008, primarily reflecting the continued support from D.E. Shaw Laminar Portfolios, the primary equity owner, through the recent debt for equity exchange. On a pro forma basis interest coverage improves to about 1.5x versus 0.8x for the latest twelve months through June 29, 2008. Moody's believes that the reduced debt service requirement and continued support from its primary equity owner should give Foamex L.P. some flexibility during the current economic slowdown. However, the corporate family rating is constrained by raw material cost volatility and industry cyclicality of its end markets.

Foamex International Inc., headquartered in Linwood, PA and operating primarily through its wholly-owned subsidiary Foamex L.P., is a leading manufacturer and distributor of flexible polyurethane and advanced polymer foam products. Last twelve months June 29, 2008 revenues were approximately $1.0 billion.

Forest City Enterprises Inc. reported that its subsidiary, Forest City Ratner Companies, closed on $167 million in construction financing for 80 DeKalb, a 335,000-square-foot residential building on DeKalb Avenue in downtown Brooklyn.

The 34-story, Costas Kondylis-designed building is the first residential tower constructed by Forest City in Brooklyn. It is designed to achieve LEED certification and will include 73 affordable and 292 market-rate rental units, making it the first 80/20 development in Brooklyn financed with bonds issued by the New York State Housing Finance Agency.

"This is an exciting project," said Charles A. Ratner, Forest City president and chief executive officer. "It is a magnificent building at a great location that will provide both affordable and market-rate apartment homes. It's also a tribute to our New York team and the relationships they have built in both the public-sector and private-sector financing community."

The New York State Housing Finance Agency selected 80 DeKalb to receive $109.5 million in tax-exempt bonds and $27.5 million in taxable bonds. The lending institutions involved in the transaction were Wachovia Bank, N.A., and Helaba, as well as the National Electrical Benefit Fund, which provided a $10 million mezzanine loan and $20 million of credit enhancement.

Major construction on the building began in July and it is expected to open for leasing during the summer of 2009.

Update on 2008 and 2009 maturities

Along with the announcement of the 80 DeKalb financing, the company also provided an update on the status of upcoming loan maturities due in both 2008 and 2009. Of total 2008 maturities of $903 million at the Company's pro-rata share reported on Jan. 31, 2008, more than 90 percent have been addressed to date through closed loans, scheduled amortization, committed refinancings or available extensions.

In other 2008 financings, the Company has also secured to date more than $1.3 billion at the Company's share in closed or committed loans for financings related to its development and acquisition pipeline in addition to early financings of future loan maturities on existing properties.

Looking ahead to 2009, of the $690 million in scheduled maturities at the Company's share reported on January 31, 2008, approximately 60 percent have been addressed to date, either through closed loans, scheduled amortization or available extensions.

"We continue to manage our maturities effectively, recycling capital from our portfolio where prudent to apply to other strategic uses," Ratner said. "We also continue to achieve success in accessing non-recourse financing to fund development and strategic acquisitions based on our track record and long-term relationships with lenders. Financing continues to be available for well-conceived and well-sponsored projects and properties in solid markets with good demographics, both in our portfolio and in our development pipeline."

About Forest City Enterprises

Headquartered in Cleveland, Ohio, Forest City Enterprises, Inc. isa $5.9 billion NYSE-listed real estate company. The Company isprincipally engaged in the ownership, development, acquisition andmanagement of commercial and residential real estate throughoutthe United States. The Company's portfolio includes interests inretail centers, apartment communities, office buildings and hotelsin 20 states and the District of Columbia.

* * *

As reported in the Troubled Company Reporter on April 7, 2008,Moody's Investors Service affirmed the senior unsecured debtratings (Ba3) of Forest City Enterprises, Inc., and revised therating outlook to negative from stable.

FOURTH STREET: Fitch Lowers Ratings for Eight Classes of Notes--------------------------------------------------------------Fitch has downgraded and removed from Rating Watch Negative eight classes of notes issued by Fourth Street Funding Ltd. and Fourth Street Funding LLC. These rating actions are the result of Fitch's review process and are effective immediately:

Fourth Street is a cash CDO that closed on April 26, 2007, and is managed by NIR Capital Management LLC. On March 12, 2008, Fourth Street entered an Event of Default due to a breach of the Class A Principal Coverage test. On March 14, 2008, the majority of noteholders voted to terminate the reinvestment period and to accelerate the transaction.

Presently, 91.4% of the portfolio is comprised of 2005, 2006 and 2007 vintage U.S. subprime RMBS and 8.6% consists of 2006 and 2007 vintage U.S. structured finance SF CDOs

Since the last rating action in November 2007, 78.8% of the portfolio has been downgraded with an additional 9.2% of the portfolio currently on Rating Watch Negative. Approximately 98% of the portfolio is now rated below investment grade, of which 81.2% is rated 'CCC+' or below. As per the latest trustee report dated July 7, 2008, defaulted and deferred interest payment in kind securities constitute 41.9%, or $188.3 million, of the portfolio total. The negative credit migration experienced since the last review has resulted in the Weighted Average Rating Factor deteriorating to 'B/B-' as of the last trustee report from 'BBB/BBB-' during the last review, breaching its covenant of 7.26 ('BBB-').

Fourth Street does not contain overcollateralization or interest coverage tests that would otherwise trap excess spread to pay down the notes should principal or interest coverage fall below certain pre-specified levels. However, the transaction contains a class A sequential pay test that, if triggered, requires commencement of the sequential pay period thereby diverting all principal proceeds to paydown the most senior class outstanding before other notes receive principal. Currently, the class A sequential pay test level is 20.1% and is failing the trigger of 129.14%. As a result, the class A-1 notes are receiving their monthly interest payments and all available principal proceeds. Fitch expects only the class A-1 notes to receive future principal distributions. Classes A-2, A-3, B, and C continue to receive timely interest payments, but have little prospect of any principal recovery. Classes D, E, and F are currently not receiving any interest or principal payments. Fitch does not expect these classes to receive any payments in the future.

The rating of the classes A-1, A-2, A-3, B, and C notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal by the legal final maturity date as per the transaction's governing documents. The ratings of the classes D, E, and F notes address the ultimate receipt of interest payments and the ultimate receipt of principal by the legal final maturity date as per the transaction's governing documents. The ratings are based upon the capital structure of the transaction, the quality of the collateral, and the protections incorporated within the structure.

Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date.

FREDDIE MAC: Looks to Refinance $225 Billion by End of Sept. 2008----------------------------------------------------------------Freddie Mac and Fannie Mae are looking for ways to refinance $225 billion worth of debt by the end of September as investors are remaining cautious about the two government-sponsored enterprises, reports ABIWorld.

Shares of both companies have been hammered for weeks by fears they would no longer be able to function, a problem that would likely cripple the U.S. housing market, says ABIWorld.

As reported by the Troubled Company Reporter, the U.S. Congress in July gave the U.S. Treasury Department authority to lend money to Fannie and Freddie or take an equity stake. Because investors have little idea how Treasury would intervene, they have become less enthusiastic about adding Fannie or Freddie debt to their portfolios, creating a potentially self-fulfilling spiral, ABIWorld reports.

About Freddie Mac

The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --commonly known as Freddie Mac, is a stockholder-owned government-sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and lowcost source of credit to finance America's housing.

Freddie Mac conducts its business primarily by buying mortgagesfrom lenders, packaging the mortgages into securities and sellingthe securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to FreddieMac to fund new mortgages, constantly replenishing the pool offunds available for lending to homebuyers and apartment owners.

FRONTIER AIRLINES: Shareholder Says Equity Has Been Neglected-------------------------------------------------------------In a letter addressed to the U.S. Bankruptcy Court for the Southern District of New York dated Aug. 15, 2008, Edward Ken Mauzy, a shareholder at Frontier Airlines Holdings Inc., says that Frontier Airlines Holdings Inc. and its subsidiaries' bankruptcy cases show an "apparent overlooking of the interests of shareholders."

Mr. Mauzy admits that under Chapter 11 law, the stockholders are not first in line. However, options to preserve their interests in the company must be considered.

In this regard, Mr. Mauzy suggests the option of selling Frontier to another airline or entity, with the stockholders receiving the proceeds of the sale or shares in the acquiring company. Being a "highly regarded airline with new opportunities for expansion," Frontier will be marketable, Mr. Mauzy says.

In the alternative, Frontier can offer additional shares to its stockholders through a stock offering, recapitalizing as required to satisfy the credit markets, Mr. Mauzy tells Judge Robert D. Drain.

Mr. Mauzy believes that a "new share distribution," if any, should include a certain amount of new shares to be given for each old share owned, even if a rescuing entity obtains the majority of the new shares.

About Frontier Airlines Inc.

Headquartered in Denver, Colorado, Frontier Airlines Inc. --http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carrierslinking their Denver, Colorado hub to 46 cities coast-to-coast,8 cities in Mexico, and 1 city in Canada, well as provideservice from other non-hub cities, including service from 10non-hub cities to Mexico. As of May 18, 2007 they operated 59jets, including 49 Airbus A319s and 10 Airbus A318s.

The Debtor and its debtor-affiliates filed for Chapter 11protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &Wardwell, represents the Debtors in their restructuring efforts.Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre& Benson LLP is the Debtors' Special Counsel, and Kekst andCompany is the Debtors' Communications Advisors. At Dec. 31,2007, Frontier Airlines Holdings Inc. and its subsidiaries'total assets was $1,126,748,000 and total debts was$933,176,000.

Net decrease in cash and cash equivalents (61,523,000)Cash and cash equivalents, beginning of period 120,837,000 --------------Cash and cash equivalents, end of period $59,314,000 ==============

About Frontier Airlines Inc.

Headquartered in Denver, Colorado, Frontier Airlines Inc. --http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carrierslinking their Denver, Colorado hub to 46 cities coast-to-coast,8 cities in Mexico, and 1 city in Canada, well as provideservice from other non-hub cities, including service from 10non-hub cities to Mexico.

The Debtor and its debtor-affiliates filed for Chapter 11protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors.

FRONTIER AIRLINES: Teamsters Balk at Request for Protective Order-----------------------------------------------------------------The International Brotherhood of Teamsters asked the U.S. Bankruptcy Court for the Southern District of New York to deny Frontier Airlines Holdings Inc. and its subsidiaries' request for a protective order, pursuant Section 1113(d)(3) of the Bankruptcy Code, blocking the Teamsters from sharing confidential data.

Frontier delivered its proposal to modify both the economic and non-economic terms of the CBAs to the Teamsters on July 29, 2008. To comply with Section 1113(b)(1)(B) of the Bankruptcy Code, which requires the provision of information that are necessary to evaluate the Proposed Modifications, Frontier delivered to the Union a draft agreement containing standard confidentiality terms, Benjamin S. Kaminetzky, Esq., at Davis Polk & Wardwell, in New York, relates, on behalf of the Debtors.

Pursuant to the Debtors' proposed Confidentiality Agreement, the Debtors will provide confidential, proprietary or other non-public confidential information to an executive committee authorized by the Teamsters to evaluate the Proposed Modifications. Any documents designated as "confidential" or "highly confidential" information that are produced to the Executive Committee will be subject to the Agreement.

Mr. Kaminetzky says the Teamsters has asserted that it is "entitled to all relevant information immediately and unconditionally," which it can share with anyone it deems desirable, and in any forum it deems advisable. Moreover, the Teamsters also demands that Frontier immediately provide highly confidential and commercially sensitive competitive information, including, among other things, the Company's business plan, projected statements of income and all liquidation and valuation analyses.

"Unless we have the information, there's no reason to meetwith them," Teamsters Local 961 President Matthew Fazakas told Bloomberg News, adding that the union had proposed bargaining sessions begin next week.

The Teamsters has also declined Frontier's efforts to engage in negotiations over confidentiality terms, which refusal has caused delay and frustrated the confidentiality process pursuant to Section 1113 of the Bankruptcy Code, Mr. Kaminetzky adds.

Section 1113 requires the Debtors to "provide the Union with relevant information as is necessary to evaluate the proposal," and authorizes the Court to prevent disclosure of information, as necessary to avoid compromising the position of the Debtors with respect to their competitors in the industry.

"Frontier only seeks to comply with its statutory duty under Section 1113 to share certain highly confidential information and commence negotiations with the Teamsters; however, it cannot do so in the absence of confidentiality protections, as disclosure could threaten Frontier's competitive position and survival in the airline industry," Mr. Kaminetzky explains.

Teamsters contended that the Debtors' request for a protective order is "antithetical" to Section 1113(d)(3) of the Bankruptcy Code. The Teamsters asserted that it is "entitled to all relevant information immediately and unconditionally," and demanded disclosure of, among other things, the company's business plan, forecasted statements of income and all liquidation and valuation analyses -- information that are "highly confidential and commercially sensitive" according to the Debtors.

Marianne Goldstein Robbins, Esq., at Previant Goldberg, Uelmen, Gratz, Miller & Brueggemen, S.C., in Milwaukee, Wisconsin, contends on the Teamsters' behalf, that the Debtors have neither presented an argument that their proposed Protective Order is consistent with the Teamsters' needs, nor that it is necessary to protect them from disclosure to competitors.

Ms. Robbins points out that airlines are required to report to the Department of Transportation and make available to the public, their financial information, including balance sheets, statements of cash flow, financial statements of operation, employment statistics, U.S. and foreign carrier traffic and capacity information, and report of financial data.

There was no method to challenge designations of confidential information, or any procedure by which the Debtors would make the showing, as required by Section 1113(d)(3), Ms. Robbins told Judge Robert D. Drain.

Pursuant to Section 1113(b), any proposal for modifications to the Debtors' CBAs with the Teamsters must be "based upon the most complete and reliable information available at the time of the Proposal," thus, protection against information disclosure applies against third parties only, not against the Teamsters, Ms. Robbins contends.

Specifically, Section 1113 prohibits the disclosure of information that applies only to those that harm the Debtors' position versus their direct competitors in the same industry, which are limited to matters that involve "trade secrets," Ms. Robbins says.

Ms. Robbins adds that the Debtors' proposed Confidentiality Agreement has a category of "highly confidential" information that could only be filed under seal. In this regard, the proposed Agreement purported to cover documents that have already been produced retroactively, she maintained.

Furthermore, "rank-and-file members have a federally-protected right to participate in union affairs which cannot be impaired by the federal courts . . . and mandates that [the C]ourt protect union democracy and the rank-and-file's right to know," Ms. Robbins told Judge Drain.

About Frontier Airlines Inc.

Headquartered in Denver, Colorado, Frontier Airlines Inc. --http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carrierslinking their Denver, Colorado hub to 46 cities coast-to-coast,8 cities in Mexico, and 1 city in Canada, well as provideservice from other non-hub cities, including service from 10non-hub cities to Mexico.

The Debtor and its debtor-affiliates filed for Chapter 11protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors.

The liquidation proceedings and the closure were decided after the airline reportedly failed to reach agreement with final interested party, Bravia Capital, on the sale of its operations. The airlines received several expressions of interest, including from Centurion Air Cargo, but no deal was reached, according to the report.

According to the report, a source close to the airline said only a skeleton staff remains at the company and most employees have been informed of the closure. Reportedly, Gemini's four MD-11Fs will be returned to the lessors, two to GECAS and two to AerCap.

About Gemini Air Cargo

Based in Dulles Virginia, Gemini Air Cargo, Inc. --http://www.geminiaircargo.com/-- provides airfreight services. It operates cargo schedules and charters on a wet-lease basis.

The Debtor and a debtor-affiliate first filed for chapter 11protection on March 15, 2006, (Bankr. S.D. Florida Case Nos. 06-10870 and 06-10872). Kourtney P. Lyda, Esq., at Haynes and Boone,LLP, represents the Debtor. The Debtors emerged from bankruptcyfive months later in August 2006.

The Debtor filed for chapter 22 protection together with its threedebtor-affiliates on June 18, 2008 (Bankruptcy S.D. Fla. Lead CaseNo. 08-18175). Paul Steven Singerman, Esq., at Berger SingermanP.A., represents the Debtors in their restructuring efforts. TheDebtor's financial condition as of the petition date showedestimated assets of between $100 million and $500 million anddebts of between $100 million and $500 million.

Ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on-going review process.

At June 30, 2008, the company's consolidated balance sheet showed $339.1 million in total assets and $479.4 million in total liabilities, resulting in a $140.3 million stockholders' deficit.

Including income on disposal of discontinued operations of $15.4 million, the company reported net income of $16.3 million for the second quarter ended June 30, 2008. This compares with a net loss of $14.4 million, including income from discontinued operations of $367,000, for the same period last year.

The company disclosed that on June 30, 2008, it had closed the sale of its Oakstone Publishing business. As a result of the disposition, the results of Oakstone Publishing have been reclassified as discontinued operations for all periods presented in the consolidated financial statements. The company also disclosed on July 1, 2008, that it was suspending the sale process for its test-prep and intervention business, Triumph Learning, and its audio book publishing business, Recorded Books.

Revenue for the second quarter 2008 was $51.9 million, an increase of $1.3 million, or 2.7%, compared to revenue of $50.6 million for the second quarter 2007, reflecting growth in the company's Test-Prep and Intervention and Library segments, partially offset by a continued revenue decline in the company's K-12 Supplemental Education segment.

Income from operations increased $3.5 million to $8.4 million for the second quarter 2008, primarily reflecting the revenue growth for the quarter, in addition to decreased cost of goods sold expenses and amortization of pre-publication costs associated with the wind-down of the Sundance/Newbridge business.

EBITDA, which the company defines as earnings before interest, taxes, depreciation, amortization, discontinued operations and goodwill impairment charges, grew $1.8 million to $14.4 million for the second quarter 2008, primarily reflecting quarter revenue growth and decreased cost of goods sold, offset by increased restructuring costs associated with the wind-down of its Sundance/Newbridge business.

On Aug. 15, 2008, the company refinanced its senior secured term loans due Aug. 15, 2008. The company borrowed $108.2 million under the new credit facility and used a combination of net proceeds plus cash on hand, including cash received from its previous sale of its Oakstone Publishing business to repay its existing senior secured term loans in full. In addition, on Aug. 15, 2008, the company retired $31.2 million of its 11 3/4% Senior Notes due 2011.

Results for the Six Months Ended June 30, 2008

Revenue for the six months ended June 30, 2008, increased to $96.8 million from $96.2 million for the six months ended June 30, 2007, reflecting growth in the company's Library, Test-prep and Intervention segments offset by a revenue decline in the company's K-12 Supplemental Education segment.

Income from operations for the six months ended June 30, 2008 increased $1.3 million, primarily due to the decreases in costs of goods sold and amortization of pre-publication costs offset by increased restructuring related costs associated with the wind down of the company's Sundance/Newbridge business and increased professional fees related to the suspended efforts to sell the company's Recorded Books and Triumph Learning businesses.

EBITDA improved $200,000 to $23.1 million for the six months ended June 30, 2008, reflecting increases in the Library and K-12 Supplemental Education segments off-set by a decrease in the Test-prep and Intervention segment and one time charges associated with suspended efforts to sell the company's Recorded Books and Triumph Learning businesses.

For the six months ended June 30, 2008, the company invested $10.6 million in pre-publication costs, compared to $11.4 million during the same period in 2007. Pre-publication costs relate to costs incurred in the development of new products.

For the six months ended June 30, 2008, the company invested $600,000 in property and equipment, compared to $1.1 million during the same period in 2007. Property and equipment expenditures relate to the purchase of tangible fixed assets such as computers, software, and leasehold improvements.

Founded in 1997 and based in White Plains, New York, Haights CrossCommunications Inc. -- http://www.haightscross.com/-- is a developer and publisher of products for the K-12 supplemental education and library markets. The company's products include supplemental reading books with a concentration on non-fiction content, state-specific test preparation materials, skills assessment and intervention books and unabridged audiobooks. The company's products are sold primarily to schools and libraries.

* * *

As reported in the Troubled Company Reporter on June 24, 2008,Moody's Investors Service downgraded Haights Cross Communications Inc.'s Corporate Family rating to Caa3 from Caa1 and its Probability of Default rating to Ca from Caa2.

HINES HORTICULTURE: Taps Epiq Bankruptcy as Claims Agent--------------------------------------------------------Hines Horticulture Inc. and its affiliate ask the United States Bankruptcy Court for the District of Delaware for permission to employ Epiq Bankruptcy Solutions LLC as their claims, notice and balloting agent.

Epiq Bankruptcy will:

a) assist the Debtors with all required notices in these cases including, among others:

-- notice of commencement of these Chapter 11 cases and the initial meeting of creditors under Section 3419a) of the Bankruptcy Code;

-- notice of claims bar dates;

-- notice of objections to claims;

-- notice of any hearings on the Debtors' disclosure statement and confirmation of the Debtors' Chapter 11 plan; and

-- other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for the orderly administration of these Chapter 11 cases;

b) file with the clerk's office a certificate or affidavit of service that includes:

-- a copy of the notice served;

-- a list of persons upon whom the notice was served along with their addresses; and

-- the date and manner of service;

c) receive, examine and maintain copies of all proofs of claim and proofs of interest filed in the case;

d) maintain official claim registers in each of the Debtors' cases by docketing all proofs of claims and proofs of interest in the applicable claims database that includes these information for each claim or interest asserted:

-- name and address of the claimant or interest holder and any agent, if the proofs of claim or proof of interest was filed by an agent;

-- date the proof of claim or proof of interest was received by the firm or the Court;

-- claim number assigned to the proof of claim or proof of interest;

-- asserted amount and classification of the claim; and

-- applicable Debtors against which the claim or interest is asserted;

e) implement necessary security measures to ensure the completeness and integrity of the claims registers;

f) transmit to the clerk's office a copy of the claims registers on a weekly basis, unless requested by the clerk's office on a more or less frequent basis, or in the alternative, make available the claims register on-line;

g) maintain an updated mailing list for all entities that have filed proofs of claims or proofs of interest and make the list available upon request to the clerk's office or any party in interest;

h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in the case without charge during regular business hour;

i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of the transfer as required by Bankruptcy Rule 3001(e);

j) assist the Debtors with administrative tasks in the preparation of their bankruptcy schedules of assets and liabilities and statements of financial affairs;

To the best of the Debtors' knowledge, the firm is a disinterested person as defined in Section 101(14) of the Bankruptcy Code.

About Hines Horticulture

Headquartered in Irvine, California, Hines Horticulture, Inc. --http://www.hineshorticulture.com/-- operates nursery facilities located in Arizona, California, Oregon and Texas. Through itsaffiliate, the company produces and distributes horticulturalproducts. The company and its affiliate, Hines Nurseries, Inc.,filed for Chapter 11 protection on Aug. 20, 2008 (Bankr. D. Del.Case No.08-11922). Robert S. Brady, Esq., at Young, Conaway,Stargatt & Taylor, represents the Debtors in their restructuringefforts. When the Debtors filed for protection against theircreditors, they listed assets and debts between $100 million and$500 million each.

IAC/INTERACTIVE: Moodys Rates 7% Senior Unsecured Notes at Ba3--------------------------------------------------------------Moody's Investors Service downgraded IAC/InterActiveCorp's Corporate Family rating to Ba2 from Baa3, the $80 million 2035 Liberty bonds guaranteed by IAC to Ba2 from Baa3, and the remaining 7% senior unsecured notes due 2013 to Ba3 from Baa3.

Moody's also assigned a Ba1 Probability of Default rating and SGL-1 speculative-grade liquidity rating. The rating actions conclude the review for downgrade initiated on Nov. 6, 2007 in connection with IAC's announcement that its Board of Directors had approved a plan to separate into five publicly traded companies by spinning off HSN, Inc., Ticketmaster, Interval Acquisition Corp. and Tree.com to existing IAC shareholders. The rating outlook is stable.

IAC received approximately $1.15 billion of cash dividends in conjunction with the spin-offs funded from new debt offerings at HSN, Ticketmaster and Interval. In addition, approximately $750 million of the pre-spin cash balance remained with the spincos related to their operating cash needs and client cash held by Ticketmaster. IAC utilized cash along with $300 million of new notes issued by Interval to fund a tender/exchange offer for its $750 million of 7% senior unsecured notes due in 2013. Subsequent to the spin-offs, related financings and the tender/exchange offer, IAC will have approximately $1.35 billion of cash and marketable securities and balance sheet debt declines to approximately $96 million from $913 million.

The CFR downgrade reflects the significant reduction in IAC's scale and business diversity with the spin-off of approximately 78% of its revenue and approximately 73% of segment EBITDA. The spin-offs also significantly increase the company's reliance on its portfolio of Internet businesses, which are profitable as a group but subject to low entry barriers and significant business risk. The Liberty bonds are guaranteed by IAC and have a security interest in the mortgage on IAC's headquarters building in Manhattan that allows bondholders to foreclose on the building in the event of a default. Moody's ranks the Liberty bonds ahead of the remaining 2013 notes in the LGD framework because the 2013 notes are a senior unsecured obligation of IAC with no security interest in the building, and this drives the one notch rating differential on those bonds.

The Ba2 CFR reflects IAC's ability to generate cash throughthe development of a variety of consumer-oriented Internet applications that build upon its expertise in online marketing and distribution, the sizable net cash position available to pursue its strategic objectives, and low leverage. IAC will consist of Ask.com, Match.com, Citysearch.com, ServiceMagic.com and various other Internet companies with a collective reach that demonstrates the company's marketing and distribution skills. Moody's expects IAC will continue to leverage these capabilities by developing and acquiring online businesses. There is significant event risk and Moody's believes IAC will continue to exhibit a sizable amount of churn in the business portfolio.

IAC's primary online properties have established brand names and reasonably long operating histories. However, the speculative-grade rating reflects the instability inherent in Internet businesses due to low entry barriers and significant competition that includes larger and more diversified companies with more capacity to invest to keep pace with consumer trends and technology advances.

IAC's sizable net cash position and relatively low debt-to-EBITDA provide IAC financial flexibility to pursue its investment and growth strategy and position the company at the upper end of the speculative-grade rating range.

The stable rating outlook reflects Moody's expectation that IAC's online operations will continue to generate reasonable profit margins and cash flow, and that the company will maintain good interest coverage and a relatively conservative capital structure as it pursues its strategic objectives.

The SGL-1 speculative-grade liquidity rating reflects the company's very good liquidity created by the sizable $1.5 billion pro forma cash balance, positive free cash flow generation, and the absence of any meaningful debt maturities until 2013. Moody's expects that IAC will utilize a portion of the cash for acquisitions and share repurchases, but maintain a comfortable net cash position over the 12-month liquidity horizon.

IAC, headquartered in New York City, owns a portfolio of Internet companies. Properties include the search engine Ask.com, online dating sites Match.com and Chemistry.com, the Citysearch.com local entertainment guides, the home improvement contractor marketplace ServiceMagic.com, and a series of other consumer applications and portals. IAC plans to spin-off portfolio businesses HSN, Ticketmaster, Interval, and Tree.com in August 2008. Upon completion of the spin-offs, IAC's pro forma revenue approximates $1.4 billion for the LTM June 30, 2008 period.

IAC/INTERACTIVECORP: S&P Affirms 'BB' Rating; Off Watch-------------------------------------------------------Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on New York City-based IAC/InteractiveCorp and removed it from CreditWatch, where it was placed with negative implications Nov. 5, 2007, following IAC's announcement that it planned to divide itself into five publicly traded companies. The rating outlook is stable.

"The CreditWatch removal and rating affirmation follows the close of the company's spin-off transaction, and our evaluation of the company's business outlook, financial policy, and capital structure," S&P says.

"At the same time, we affirmed the rating on IAC's 7% senior notes due 2013, of which about $16 million is expected to remain outstanding after the company's tender offer, at 'BB' (at the same level as the 'BB' corporate credit rating). We assigned a recovery rating of '3' to this debt, indicating our expectation for meaningful (50%-70%) recovery in the event of a payment default," S&P adds.

We also revised the issue-level rating on the Liberty Bonds series 2005 due 2035 to 'BB+' (one notch higher than the corporate credit rating) from 'BB', and assigned a recovery rating of '2' to this debt, indicating our expectation for substantial (70%-90%) recovery in the event of a payment default.

"The 'BB' corporate credit rating reflects IAC's reduced level of business diversity following the spin-offs, competition from well-positioned and better capitalized competitors, several start-up loss-generating businesses and the risk of extended investment periods for start-up initiatives, and vulnerability to continuing changes in technology and consumer and business demands," said Standard & Poor's credit analyst Michael Altberg. "These factors are partially offset by the company's adequate liquidity position provided by cash balances, good conversion of EBITDA to discretionary cash flow, low debt leverage following the tender of the large majority of 7% senior notes, and fairly well-established Internet brands."

Following the spin-off, IAC will be an Internet-based company consisting of its Media & Advertising segment, which includes its search-related business; Match.com, the largest online dating service, with about 1.3 million paid subscribers; ServiceMagic, an online marketplace that connects consumers with home service professionals; and its emerging business group of start-up initiatives.

ICFQ DESARROLLOS: Wants to Employ Charles Cuprill as Counsel------------------------------------------------------------ICFQ Desarrollos Carraizo, Inc., asks permission from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Charles A. Cuprill, P.S.C., Law Offices, as its bankruptcy counsel.

Charles A. Cuprill-Hernandez, Esq., a member at the firm, tells the Court that the firm's professionals will bill the Debtor at these hourly rates:

Charles A. Cuprill-Hernandez $350 Associate $200 Paralegals $50

Documents submitted to the Court did not specify the firm's services to be rendered in the Debtor's case.

Mr. Cuprill-Hernandez assures the Court that the firm does not represent any interest adverse to the Debtor.

INDUSTRIAL DEVELOPMENT: Fitch Affirms BB Rating on $8.37MM Bonds ----------------------------------------------------------------Fitch Ratings has affirmed the Industrial Development Authority of the County of St. Louis, Missouri's outstanding $8.37 million revenue bonds (issued on behalf of Nazareth Living Center) at 'BB+' as:

Industrial Development Authority of the County of St. Louis, Missouri -- $8,569,000 health care facilities refunding revenue bonds, series 1999.

The Rating Outlook is Stable.

Rating rationale and primary drivers behind the rating affirmation and Stable Outlook are based on Nazareth Living Center's continued operating stability and strong debt service coverage. NLC posted an operating margin of 8% on revenue of $13.6 million in fiscal-year 2007, continuing a four-year trend of positive results since posting an operating loss in 2003. Furthermore, debt service coverage remains strong at 3.3 times as of June 30, 2008, continuing a trend of coverage in excess of 3.0x since 2006; again much improved from 1.6x in 2003 and well above rate covenants that were tripped in 2000 and 2001. Although the positive operating performance has improved the overall credit profile of NLC, upward movement in the rating is precluded at this time in large part due to NLC's declining census in both ALU and SNF (76.2% and 93.1%, respectively) and its high average age of plant (11.7 years as of June 30, 2008 ). Furthermore, NLC's small revenue size ($13.6 million in 2007) and the inherent risks associated with its delivery model (mix of SNF and ALU) limits its ability to quickly adjust to major shifts in reimbursement, competitive pressures, and/or major expense drivers such as increases in labor and supply costs that outpace inflation.

Fitch has previously noted its concern regarding declining utilization, specifically as it relates to the activity of the Sisters of St. Joseph of Carondelet. NLC is sponsored by the Sisters and has a contract with the order that was updated in 2005 to ensure more appropriate reimbursement. NLC relies heavily on the payment contract with the Sisters, which comprise roughly 39% of total facility utilization and is the largest payor contract. As the Sisters' occupancy declines commensurate with the declining number of Sisters in the order, Fitch believes NLC will be challenged to replace that activity with private pay patients at rates similar to the Sisters' contract especially given the very competitive nature of NLC's core market area. NLC's marketplace is very competitive with several competitors having relatively new assisted living units. Meramec Bluffs, sponsored by Lutheran Senior Services (rated 'A-' by Fitch) and Friendship Village of South County (rated 'A-') have recently added new units to their campuses. Management reported that Erickson Retirement Communities is entering the market and has opened a sales office six miles from NLC. Finally, Presbyterian Manors of Mid-America Inc. is planning to build a continuing care retirement community on the campus of the former SSM St. Joseph hospital campus in Kirkwood, approximately eight miles from NLC.

The Stable Outlook is based on Fitch's belief that management can maintain NLC's current profitability and liquidity profile. Fitch believes that management's recent initiatives to increase Medicare revenues will allow NLC to remain profitable and allow for investments in core facilities without materially weakening NLC's current balance sheet. Furthermore, NLC's entered into a management services relationship with Benedictine Health Services (BHS, formerly an affiliate of Essentia Health - Essentia Health is rated 'A-' ) on Jan. 1, 2008, which is viewed positively by Fitch. The common religious mission and senior living specialization of the two entities is expected to produce synergies through shared strategies and management best practices that should lead to continued operating stability for NLC.

Located in St. Louis, Missouri, Nazareth Living Center operates 134 assisted living units and 140 skilled nursing beds. Under the series 1999 bond documents, NLC is required to disclose only annual financial statements to the trustee for the benefit of bondholders. However, Fitch views favorably NLC's distribution of interim financials and utilization statistics directly to requesting bondholders.

INTERMET CORP: Obtains Interim Approval to Use Cash Collateral--------------------------------------------------------------The Honorable Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware gave auto supplies maker Intermet Corp., which filed for Chapter 11 protection for the second time on August 12, permission to access cash collateral from a group of prepetition lenders despite the lenders' objections, reports Bankruptcy Law360.

Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for theautomotive and industrial markets. The company and its debtor-affiliates filed for Chapter 11 protection on August 12, 2008 (D.Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' lead counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. When the Debtors filed for protection from their creditors, they listed assets between $50 million and $100 million and total debts between $100 million and $500 million.

ISONICS CORP: Losses Cue Hein & Associates' Going Concern Doubt---------------------------------------------------------------Denver-based Hein & Associates LLP raised substantial doubt about the ability of Isonics Corporation to continue as a going concern after it audited the company's financial statements for the year ended April 30, 2008.

The auditing firm reported that the company has suffered recurring losses from operations and will continue to require funding from investors for working capital.

The company posted a net loss of $11.21 million on total revenues of $22.16 million for the year ended April 30, 2008, as compared with a net loss of $13.17 million on total revenues of $27.73 million in the prior year.

Management Statement

The company has working capital shortages in the past and, although the company raised capital totaling more than $46.8 million (net of expenses and $4.1 million of payments related to its 8% Debentures) since May 1, 2004, the company has generated significant losses, which have impacted its working capital.

As of April 30, 2008, the company's consolidated balance sheet reflects a working capital deficit of $13.13 million.

The company expects that these conditions will continue for the foreseeable future unless the company is able to raise a substantial amount of additional financing. In view of these matters, the company's ability to continue to pursue its plan of operations is dependent upon its ability to raise the capital necessary to meet its financial requirements on a continuing basis.

Based on the amount of capital remaining and expected negative cash flow from operations and investing activities, management anticipates that the company will not be able to positively impact its working capital unless it is able to substantially increase revenues or reduce expenses thereby generating positive cash flow from operations and (ultimately) operating income.

As a result of the financing in June 2008, the management believes that the company currently has enough working capital to finance its anticipated operations and projected negative cash flow into the quarter ending Oct. 31, 2008.

In addition, if the company is able to secure an offer for asset-based financing from a third party, YA Global has agreed to review that proposed financing and in its sole discretion consider releasing its security interest in certain of the company's assets to secure that financing.

If the company is successful at obtaining a minimum of $1.00 million of additional financing, management believes that the company could have enough working capital to finance its anticipated operations and projected negative cash flow into the fiscal year ending April 30, 2010.

Because of the terms of the existing YA Global financing, the company is unable to secure any additional financing without YA Global's consent and approval. Because of the potential dilution associated with the 13% Debentures and the holder's security interest in substantially all of the company's assets, management believes that it is unlikely that the company will be able to obtain additional financing unless it is able to reach an accommodation with its existing debenture holder.

Event of Default Probability

The company currently may be non-compliant with certain covenants of the 13% Debentures and as a result, YA Global may potentially be able to, in its discretion, declare an Event of Default.

In addition, it is likely that the company will be unable to comply with certain financial covenants of the Term Notes during its fiscal year ending April 30, 2009. As a result YA Global may potentially also be able to, in its discretion, declare an event of default on those notes.

Remedies for an event of default include the option to accelerate payment of the full principal amount of the 13% Debentures and Term Notes, together with interest and other amounts due (a cumulative amount of $20.90 million at April 30, 2008), to the date of acceleration and the holder will have the right to request such payment in cash or in shares (as it relates to the YA Global Debentures) of the company's common stock.

The 13% Debentures and Term Notes are secured by all, or substantially all, of the company's assets. If YA Global declares an event of default on any of the 13% Debentures or the Term Notes, it is probable that the company will not be able to cure the default or contest any efforts that YA Global may take to foreclose against its security interest in substantially all of the company's assets. Following such foreclosure, it is likely that few or no assets would remain for distribution to its shareholders.

Balance Sheet

At April 30, 2008, the company's balance sheet showed $12.76 million in total assets and $17.81 million in total liabilities, resulting in a $5.05 million stockholders' deficit.

The company's consolidated balance sheet at April 30, 2008, also showed strained liquidity with $4.02 million in total current assets available to pay $17.15 million in total current liabilities.

JOHNSTON SHIELD: Wants to Hire Sierra Consulting as Bankr. Counsel------------------------------------------------------------------Johnston Shield, Inc., asks permission from the U.S. Bankruptcy Court for the District of Arizona to employ Sierra Consulting Group, LLC as its bankruptcy counsel.

Sierra Consulting will, among others, assist the Debtor in the development and confirmation of the Debtor's proposed Plan of Reorganization, including financial and feasibility studies or appraisals necessary for the development, submission and confirmation of the Debtor's proposed plan, and securing debtor-in-possession financing.

The auditing firm pointed to the company's significant recurring losses. The auditor also stated that the realization of a major portion of the company's assets is dependent upon Juma's ability to meet its future financing needs and the success of its future operations.

The company posted a net loss of $15,861,359 on net sales of $12,587,003 for the year ended Dec. 31, 2007, as compared with a net loss of $1,528,153 on net sales of $11,063,329 in the prior year.

The company's ability to continue as a going concern is dependent upon its ability to obtain financing to repay its current obligations and its ability to achieve profitable operations. Management plans to obtain financing through the issuance of additional debt, the issuance of shares on the exercise of warrants and potentially through future common share private placements.

Management hopes to realize sufficient sales in future years to achieve profitable operations, specifically by fully launching the products offered by the company's subsidiary Nectar Services Corp. and eliminating the current resource burden of that entity on the company.

The resolution of the going concern issue is dependent upon the realization of management's plans. There can be no assurance provided that the company will be able to raise sufficient debt or equity capital on satisfactory terms. If management is unsuccessful in obtaining financing or achieving profitable operations, the company may be required to cease operations.

The company incurred research and development expenditures of $642,398 for the year ended Dec. 31, 2007, related to the development of the Nectar Services Corp. carrier services platforms (i.e. managed and carrier services). Management expects to continue to incur these expenditures into the foreseeable future.

At Dec. 31, 2007, the company's balance sheet showed $6,462,726 in total assets and $8,885,547 in total liabilities, resulting in a $2,422,821 stockholders' deficit.

The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $4,674,837 in total current assets available to pay $4,872,667 in total current liabilities.

Based in Farmingdale, N.Y., Juma Technology Corp. (JUMT.OB) -- http://www.jumatechnology.com/-- is a convergence systems integrator that provides communication systems, applications, and services for the implementation and management of data, voice, and video requirements in businesses, government agencies, municipalities, and educational institutions. The company also provides Enterprise Session Management platform that transforms isolated telephony resources into a unified communications platform, as well as provides disaster recovery services. In addition, Juma Technology offers telephone carrier services. The company was founded in 2002.

JUPITER HIGH: Fitch Cuts Rating for Seven Classes of Certificates -----------------------------------------------------------------Fitch has downgraded and removed from Rating Watch Negative seven classes of notes issued by Jupiter High Grade CDO VII Ltd. and Jupiter High-Grade CDO VII Inc. These rating actions are the result of Fitch's review process and are effective immediately:

Jupiter VII is a cash CDO that closed on Aug. 2, 2007, and is managed by Maxim Advisory LLC. On Nov. 30, 2007, Jupiter VII entered an Event of Default due to a breach of the Class A Principal Coverage test. On Feb. 6, 2008, the majority of noteholders voted to terminate the reinvestment period and to accelerate the transaction.

Presently, 46.1% of the portfolio is comprised of 2006 and 2007 vintage U.S. subprime RMBS, 8% is comprised of 2005, 2006, and 2007 vintage U.S. Alternative-A RMBS, and 23.5% consists of 2006, and 2007 vintage U.S. SF CDOs. Additionally, 15.6% of the portfolio is comprised of prime RMBS and a small percentage of the portfolio consists of commercial mortgage-backed securities and commercial asset-backed securities.

Since the last rating action in November 2007, 80% of the portfolio has been downgraded with an additional 34.8% of the portfolio currently on Rating Watch Negative. Approximately 74% of the portfolio is now rated below investment grade, of which 66% is rated 'CCC+' or below. As per the latest trustee report dated June 30, 2008, defaulted and deferred interest payment in kind securities constitute 37.5%, or $562.8 million, of the portfolio total. The negative credit migration experienced since the last review has resulted in the Weighted Average Rating Factor deteriorating to 'BB-/B+' as of the last trustee report from 'AA/AA-'during the last review, breaching its covenant of 1.28 ('AA-/A+').

The collateral deterioration has caused each of the overcollateralization ratios to fall below 100% and fail their respective test levels. As of the latest trustee report, the class A OC ratio was 50.45%, the class B OC ratio was 49.71%, and the class C OC ratio was 49.34% versus triggers of 101.0%, 100.8%, and 100.8%. Class A-1 is receiving interest payments and all other interest and principal proceeds are then used to redeem class A-1 principal. Fitch expects class A-1 to continue to receive timely interest payments, however, projects only partial recovery of the principal. Classes A-2, A-3, A-4, A-5, B, and C are currently not receiving interest or principal payments. Fitch does not expect these classes to receive any payments in the future.

The ratings of the class A-1, A-2, A-3, A-4, and A-5 notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal by the legal final maturity date as per the transaction's governing documents. The ratings of the class B and C notes address the ultimate receipt of interest payments and the ultimate receipt of principal by the legal final maturity date as per the transaction's governing documents. The ratings are based upon the capital structure of the transaction, the quality of the collateral, and the protections incorporated within the structure.

Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date.

Fitch will continue to monitor and review this transaction for future rating adjustments.

LA BONITA: Gets Initial Approval to Use SunTrust's Cash Collateral------------------------------------------------------------------The Hon. Michael G. Williamson of the United States Bankruptcy Court for the Middle District of Florida authorized La Bonita Ole, Inc., to use, in an interim basis, cash collateral of SunTrust Bank, N.A., until Oct. 8, 2008.

A hearing is set for Sept. 10, 2008, at 9:30 a.m., to consider final approval of the Debtor's request.

The Debtor owes at least $3,053,733 in loan under four different loan agreements, which is composed of:

Headquartered in Tampa, Florida, La Bonita Ole, Inc., on filed for Chapter 11 protection on July 16, 2008 (Bankr. M.D. Fla. Case No. 08-10512). Don M. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, represents the Debtor in its restructuring efforts. When the Debtors filed for protection against its creditors, it listed assets and debts between $1 million to $10 million each.

The downgrades reflect the expected losses on six assets that are in special servicing (1.14%). The rating affirmations are due to sufficient credit enhancement and stable performance of the non specially serviced loans. As of the August 2008 distribution date, the pool's aggregate certificate balance has decreased 1.10% to $2.45 billion from $2.48 billion at issuance.

There are currently six specially serviced assets (1.14%), five of which are real estate owned (REO) (0.60%) or in foreclosure (0.30%) and are currently being marketed for sale. Three of the specially serviced assets (0.60%) are multi-family properties that had the same borrower who was unable to properly manage the properties, in addition to the properties performance being negatively impacted by their locations in or near Detroit, MI. Current listing prices for these properties are well below the outstanding debt amounts, and losses are expected.

The largest specially serviced loan is the Country Inn and Suites located in Omaha, NE (0.25%). The loan is current and the borrower is looking for approval for a new guaranty to cover the completion of the mandated property improvements required by the Franchisor, and is seeking a nine-month forbearance to pay past due charges.

1301 Avenue of the Americas is the largest loan in the transaction (17.1%). The property was recently purchased and the loan was assumed by Paramount Group, Inc. from Harry Macklowe. The building is located in the heart of Manhattan's midtown office district within the Sixth Avenue/Rockefeller Center submarket. At issuance the property was 99.3% occupied. As of YE 2007, the servicer reported debt service coverage ratio (DSCR) and occupancy were 3.34x and 100%, respectively. The loan matures on Jan. 11, 2016.

The transaction has minimal near-term maturity risk as only 9.15% of the loans mature in 2010, and 72.6% mature in 2015-2016.

LEINER HEALTH: Judge Carey Approves Disclosure Statement--------------------------------------------------------The Hon. Kevin J. Carey of the United States Bankruptcy Courtfor the District of Delaware approved a disclosure statement explaining the joint Chapter 11 plan of liquidation filed by Leiner Health Products Inc. and its debtor-affiliates on July 18, 2008. He held that the disclosure statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code.

Judge Carey also approved procedures the Debtors proposed for the solicitation and tabulation of plan votes. Deadline for voting on the plan is Sept. 26, 2008, at 5:00 p.m.

A hearing is set for Oct. 7, 2008, at 1:30 p.m., to consider confirmation of the plan. Objections, if any, are due Sept. 26, 2008.

Overview of the Plan

The plan contemplates the liquidation of the each of theDebtors' assets, the appointment of a liquidating trustee, and thecreation of a three-member liquidating trust committee, whichconsist of one representative selected by the Debtors and twomembers appointed by the Official Committee of UnsecuredCreditors.

Furthermore, the plan provides the creation of a liquidating trustfor, among other things, (i) resolving all disputed claims, (ii)pursuing the causes of action, and (iii) making all distributionto the beneficiaries provided under the plan.

Asset Sale & Settlements

On July 14, 2008, NBTY Inc., the designated stalking-horse bidder,completed the sale of the Debtors' assets for $371,000,000 incash, plus the assumption of about $30,000,000 of trade payablesand a purchase price adjustment. According to court documents,the sale proceeds may be sufficient to satisfy the claims of theDebtors' senior secured lender in full, but it may not be enoughto provide a recovery to unsecured creditors.

Before the closing of the sale, the Court approved the Debtors'proposed assets sale incentive program to pay $24,000,000 inbonuses to nine insiders, who are members of the Debtors' seniormanagement team, pursuant to an asset sale incentive program datedApril 1, 2008. However, the Official Committee of UnsecuredCreditors asked the Court to reduce the amount of bonuses to$10,000,000, which is to be awarded to the insiders.

As a result, the Debtors filed on July 10, 2008, a settlementagreement before the Court seeking to approve, among otherthings:

i) the payment of at most $8,000,000 that may result in an reallocation of the proceeds of the incentive program to ensure a guaranteed minimum distribution to holders of unsecured claims, and

ii) the payment of at least $249,500,000 of the allowed secured lender claims

Debtor-In-Possession Financing

On April 8, 2008, the Court authorized the Debtors to obtain, on afinal basis, up to $74,000,000 in postpetition financing from UBSAG, Standford Branch, as issuing bank and administrative agent;UBS Securities LLC and General Electric Capital Corporation asjoint lead arrangers; UBS Securities LLC as sole book-runner,syndication agent and documentation agent; UBS Loan Finance LLC asswingline lender.

The committed $74,000,000 financing was comprised of (a) a$18,000,000 term A loan facility; (b) a $44,000,000 term B loanfacility; and (c) a $12,000,000 revolving loan facility includingavailability for letters of credit and swingline loans.

On July 14, 2008, the DIP facility was terminated after the Debtorpaid in full the claims under the DIP agreement.

The Debtors asked the Court to further extend their exclusiveperiods to (i) file a Chapter 11 plan until Sept. 30, 2008, and(ii) solicit acceptances of that plan until Nov. 30, 2008. Ahearing is set for July 30, 2008, to consider the Debtors'request.

The plan classifies interests against and claims in the Debtors infive classes. The classification of interests and claims are:

Class 1 and 3 are entitled to vote for the plan. Under Chapter 7liquidation, Class 1 is expected to recover between 18% and 26%,while Class 3 will get nothing.

Administrative, priority tax and other priority claims will bepaid in full.

Holder of Class 1 secured lender claims will receive on behalf ofitself and the senior secured lenders payment in cash equal to thefull amount of the allowed secured lender claim.

Each holder of Class 2 other secured claims will get receiveeither (i) the collateral secured the claims, or (ii) cash in anamount equal to the value of the claims, but not exceeding thevalue of the collateral securing the claim.

Each holder of Class 3 general unsecured claims will receive infull its pro rata share of the liquidating trust fund.

Class 4 and 5 will not receive any distribution on account oftheir claims under the plan.

A full-text copy of the Debtors' su

A full-text copy of the Debtors' Disclosure Statement is availablefor free at

Based in Carson, California, Leiner Health Products Inc. --http://www.leiner.com/-- manufactures and supplies store brand vitamins, minerals and nutritional supplements products, and over-the-counter pharmaceuticals in the US food, drug and mass merchantand warehouse club retail market. In addition to its primaryVMS and OTC products, they provide contract manufacturingservices. During the fiscal year ended March 31, 2007, the VMSbusiness comprised approximately 61% of net sales. On March 20,2007, they voluntarily suspended the production and distributionof all OTC products manufactured, packaged or tested at itsfacilities in the US.

The company filed for Chapter 11 protection on March 10, 2008(Bankr. D. Del. Lead Case No.08-10446). Jason M. Madron, Esq.,and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.,represent the Debtors. The Debtors selected Garden City GroupInc. as noticing, claims and balloting agent. The U.S. Trusteefor Region 3 appointed creditors to serve on an Official Committeeof Unsecured Creditors in these cases. The Committee selects SaulEwing LLP as its counsel.

As reported in the Troubled Company Reporter on April 10, 2008,the Debtors' schedules of assets and liabilities showed totalassets of $133,412,547 and total debts of $477,961,526.

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